British cycling clothing brand Le Col posted losses in excess of £6 million, its 2022 accounts show. However, the marque founded by former pro Yanto Barker is reportedly now on a "positive trajectory".
The brand saw a decline in sales "once the final Covid restrictions were lifted", following a boom in 2020 and 2021, a trend that has resulted in turmoil across the industry, with insiders calling this the 'most turbulent it's been in 30 years'.
The full accounts for 2022, published on Companies House last week, show that despite a gross profit of £4,976,468, Le Col made a loss of £6,276,837 that year.
This was largely due to "administrative expenses" of £10,578,363.
In 2022, turnover decreased by 13.3%, compared to an increase of 57.9% in 2021. Gross profit also decreased by 20.6%, compared to an increase of 25.9% in 2021.
In a statement released to Cycling Weekly on Monday, a spokesman for Le Col said: "Le Col is on a positive trajectory of growth and profitability with a restructured business, and a renewed management team led by founder, Yanto Barker.
"Despite a challenging period for the broader category, Le Col is experiencing a substantial positive swing in its business. The business has right-sized its operations, optimising them for efficiency and scalability, supported by experienced Chairman Justin Stead. The business is also now expanding into the USA market."
The company points to the "lockdown boom in cycling spend" as a reason behind the fall in revenue, but says that it "adapted swiftly to the slowdown".
"The period was one of transformation for the Le Col business," the accounts read. "The Covid lockdown boom in cycling spend came to an end, and after two years of very high sales growth in 2020 and 2021 sales declined in 2022 once the final Covid restrictions were removed and consumer spending behaviour changed.
"The business was able to adapt swiftly to the slowdown and put in place measures to mitigate the cash impact of lower sales, as well as securing external debt funding. In August 2022, a new revolving facility was signed with a revenue-backed funding specialist providing £1.5m of liquidity.
"In addition to debt funding, the institutional shareholders of the Parent Company, Le Col Holdings Limited, guided by Puma Investment Management Limited, continue to be very supportive of the business. During the period, new funding of £9.1m was completed by way of new equity issued by the parent company to these shareholders."
Furthermore: "In November 2022, a restructuring review of the company's operations was initiated, resulting in the rationalisation of overhead and headcount at the UK head office, and a change to the manufacturing supply chain to reduce costs and improve flexibility.
"For the Autumn/Winter 2023 season onwards, the group's manufacturing base shifted from a subsidiary of the parent company to third party suppliers in order to increase the flexibility of the supply chain and to reduce costs."
“Le Col is a brilliant business which is on an impressive trajectory which we fully expect to lead to a significant EBITDA rebound in 2024," Stead said. “There was massive growth in cycling in 2021 and it’s only right and sensible that the business has restructured for more sustainable growth. We have the full support of Puma Private Equity and are looking forward to an exciting year.”
Yanto Barker, the founder of Le Col, said: “Le Col has always been about the pursuit of excellence, a journey that's both challenging and rewarding. I’m really pleased that we have a very experienced chair in Justin Stead along for the ride as we head towards profitability in 2024.
“Our positive momentum continues with a strong start to trading in 2024, with double digit growth across December and January in all territories. We’re particularly encouraged by growth in our US markets, helped by our fledgling Marketplace and Wholesale channels.”
An increase in demand during the Covid pandemic, followed by a sudden drop, has caused oversupply issues across the industry.
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