Overstocking and heavy discounting both contributed to the demise of cycling distributor The Martlet Group, which entered administration earlier this year, a new report has revealed.
The company, which owned distributor i-ride and its bike brand Orro, appointed administrators FRP advisory in September, after concerns were raised about its financial situation last year.
The Martlet Group’s assets have since been purchased by investment firm Baaj Capital for £175,000. A new report has now shown the company owed £2.5 million in debts to over 100 creditors at the time of its administration.
Published last Friday, the administrator’s statement of proposal explained that a decision to “heavily discount” surplus stock led to financial problems.
“Management reported that the business of the company had traded well during the COVID period, as a result of the lockdowns and their target customer base having accumulated savings during that period,” FRP advisory wrote.
“Demand for the product continued to be strong in the period after COVID, however global supply chain issues caused an initial shortage of product to sell but as supply problems eased and product became available the company was left with surplus stock.
“The only way to deal with the overstocking issue was to heavily discount the stock, which then led to issues with working capital.”
Earlier this summer, i-ride launched what it called a “huge overstock clearance”, saying it was offering its “cheapest prices ever”.
Among the products listed were a Sram Apex 1 groupset for £399.99 (RRP £699.99) and Shimano Ultegra cranks for £109.99 (RRP £269.99).
The administrators’ latest report makes clear The Martlet Group, previously known as Jim Walker, “was not alone in facing issues” in the cycling industry, with multiple other brands entering administration or closing down.
Since the end of the Covid pandemic, these have included retailer Wiggle Chain Reaction Cycles, and distributors Moore Large, FLi and 2Pure.
In the report, FRP Advisory revealed they initially accepted an offer of £200,000 plus £100,000 in goodwill for The Martlet Group. The buyer later withdrew, at which point the decision was made to cease trading and make all of the staff redundant.
Cycling Weekly contacted FRP Advisory, who confirmed that “all” of the £2.5 million owed to creditors is still outstanding.
Due to the company’s debts, it is “currently uncertain” if the former employees will receive their salary arrears, the administrators said in the latest report.
FRP Advisory also wrote that they believe their goal of rescuing the company "will not be achieved".
