What the story of Evans Cycles can tell us about the future of Wiggle
After being bought by Frasers Group, are the woes of Wiggle Chain Reaction Cycles over?
Over the weekend, news emerged that online cycling retailer Wiggle Chain Reaction Cycles had finally found a buyer.
Mike Ashley’s Frasers Group, one of the UK’s most prominent retail behemoths, told Cycling Weekly it did not "seek to correct" a report in The Times that it has swept up the company, which entered administration in October last year, buying the brand and intellectual property for under £10m. The news signalled the end of a five-month saga for Wiggle, but mirrored the start of a more recent tale - that of Evans Cycles.
In 2018, Sports Direct founder Ashley bailed Evans Cycles out of administration, just as he appears to have done with Wiggle. The British bike shop chain had found itself in financial difficulty, short of cash to continue as a business. The company was presented to buyers with a cheap price tag, and Ashley picked it up as part of a pre-pack administration for £8m, almost a tenth of what the previous owners had paid three years earlier.
"We are pleased to have rescued the Evans Cycles brand," Ashley said at the time, but the acquisition did not put an end to Evans' struggles. "In order to save the business we only believe we will be able to keep 50% of stores open in the future. Unfortunately some stores will have to close."
The closures, though not as many as 50%, led to mass staff layoffs, and only managed to alleviate some of the company’s losses, rather than turn them around.
In the seven months following Ashley’s buyout, Evans posted pre-tax losses of over £9m. This figure improved to a £2m loss in the year to April 2020, before falling again in the company’s most recent accounts, which showed a loss of over £5m in 2022.
Put simply, Evans is still in the red. As part of Ashley’s colossal portfolio, though, the brand’s losses can be easily taped over, secured by larger capital. Frasers’ latest accounts showed a whopping pre-tax profit of £660m, driven mostly by sales through Sports Direct.
Get The Leadout Newsletter
The latest race content, interviews, features, reviews and expert buying guides, direct to your inbox!
In the wider scheme of Frasers' business, Evans' losses might therefore seem insignificant. But the group has still looked to slash costs. In the midst of the pandemic, 300 members of Evans staff were laid off, and others were moved to zero-hour contracts, with no promise of stable working hours.
Today, Evans sells a range of lower end cycling products from Sports Direct's portfolio, like Muddy Fox, and an X account called 'Avoid Evans Cycles' exists to highlight customer complaints.
The brand was saved from the brink by Frasers, but continues to struggle in the cycling market.
What does the future hold?
The situation with WiggleCRC looks even more complicated. The cycling retailer posted jaw-dropping losses of £97m in its most recent accounts, owes money to 400 creditors in the administration, and recently laid off almost every member of staff, Cycling Weekly revealed, leaving question marks over who is running the online and warehouse operations. According to a former employee, the company has "hit rock bottom". There is unlikely to be a quick fix.
It is also uncertain at this stage how Frasers might manage WiggleCRC and its brands, which count dhb, Vitus and Nukeproof. Will they now be sold through Evans and Sports Direct stores? Or will Ashley hang onto the existing online sales model?
Those who were on the inside have their own theories. One former staff member told Cycling Weekly that Wiggle's service would be "easy to resurrect through Evans", trading the stock online and in store.
Another was less clear on the brand's future. "I don't know if [Ashley] will just list his products on Wiggle's page, or whether it will just be a dirty redirect style thing," they said. "Who knows?"
The bottom line is, until the details of the acquisition are unveiled in full, only Frasers know where their intentions lie. The group is no stranger to cashing in on companies in free fall; Ashley is known as a high street tycoon, with a business strategy that has been likened to the feeding habits of a vulture.
Dr Gordon Fletcher, a business expert at the University of Salford, has seen deals like this one before. "With a number of these purchases, they've done things like they've only bought the brand name, they've only bought the IP, and not bought all of the other elements," he said.
"It looks like the assessment of Wiggle is that the value lies in the IP and in the brands, rather than perhaps its current way of retailing."
If this is the case, and if Evans' story is anything to go by, it looks like further cuts might be on the horizon for Wiggle. Branches of the business, such as its in-house brands, could be ripped off in shreds and thrown to Frasers' other sports titles. The metaphorical carcass is still warm - expect the feast to follow.
A spokesperson from Frasers Group told Cycling Weekly that it would not be commenting further, following the news of the acquisition on Sunday.
Thank you for reading 20 articles this month* Join now for unlimited access
Enjoy your first month for just £1 / $1 / €1
*Read 5 free articles per month without a subscription
Join now for unlimited access
Try first month for just £1 / $1 / €1
Tom joined Cycling Weekly as a news and features writer in the summer of 2022, having previously contributed as a freelancer. He is the host of The TT Podcast, which covers both the men's and women's pelotons and has featured a number of prominent British riders.
An enthusiastic cyclist himself, Tom likes it most when the road goes uphill and actively seeks out double-figure gradients on his rides.
-
Shimano Ultegra C60 wheelset review: fast rolling and great value, if a little heavy
The Ultegra C60 wheels share many similarities with the more expensive Dura-Ace model except for price and weight
By Andy Turner Published
-
The 16-year-old bike that's just won the Men's British National Hill Climb championships
Rim brakes, no paint, tiny seat stays and a decade-old groupset are still plenty fast enough to help champion Harry Macfarlane see off some serious competition
By Joe Baker Published
-
Rapha focused on increasing 'profitability and resilience' as losses deepen by over £10 million, meaning seven years in the red
The British brand have not posted a pre-tax profit since 2017
By Adam Becket Published
-
Wiggle sale revealed to be £3m to second-best Frasers Group
Business tycoon Mike Ashley scooped up intellectual property after initial deal fell through
By Tom Davidson Published
-
Cycling industry still 'appealing' to investors, despite turbulent post-Covid period
Brands suffered losses, bike shops closed and other areas of sector hit after pandemic, but industry should still be attractive
By Tom Thewlis Published
-
Major bike retailer posts profits despite 'downward trend' in cycling industry
Tredz records £1.4m profit after parent company Halfords issues warning
By Tom Davidson Published
-
Wiggle and Chain Reaction Cycles sites back online after Frasers Group takeover
The two brands have relaunched after a week off, with slightly different branding
By Adam Becket Published
-
Wiggle and Chain Reaction websites to be relaunched by Mike Ashley's Frasers Group
"Relaunch" set to take place next week, after Frasers Group acquired the brands
By Adam Becket Published
-
Is this the end for Wiggle and Chain Reaction after 'holding page' displayed on website?
Holding pages present on both websites, with remaining orders set to be fulfilled in 7-10 days
By Adam Becket Published
-
Is it safe to buy from Wiggle as liquidation nears?
Consumer law expert recommends only buying products from retailer that you’ve used before and were satisfied with as liquidators officially appointed by parent company
By Tom Thewlis Published