Bike manufacturer Canyon has seen its profits fall into the red, with heavy discounting and supply shortages cited as a cause.
Canyon recorded a net loss of £1.7million (€2m, $2.2m) in the first nine months of 2023, according to the latest financial report published by its key stakeholder, GBL.
This is down from a net profit of £25million (€29m, $31.7m) in the same period in 2022.
In the report, GBL identified “higher discounts on certain bike categories” and “a supply shortage of high-demand bikes” as major drivers for the brand’s loss.
In a statement shared with Cycling Weekly, Canyon CEO Nicholas De Ros Wallace said: “We saw most companies in the bicycle industry responding to inventory challenges with large discount campaigns in 2023.
“When we also decided to do so, it not only led to increased sales, but also inspired new and existing customers to interact and engage with Canyon, and ultimately to enlarging the cycling community.”
Price slashing, despite negatively impacting profits, led to a growth in Canyon’s sales volume, which increased by 23% year-on-year in quarter three.
This bucks a trend of plummeting sales volumes across the industry, with a new historic low recorded in the UK.
“This performance is remarkable given the challenging and promotional market across categories and geographies and underscores the continued solid demand for Canyon premium bicycles,” De Ros Wallace said.
A press spokesperson at Canyon outlined that the company's EBITDA (earnings before interest, taxes, depreciation and amortization) is still in the green.
In January this year, Canyon reduced the prices across its range by up to £400 for UK customers.
The brand then suffered a shortage of road and gravel bikes in the third quarter of 2023, due to production challenges with one of its suppliers.
According to the company CEO, the “inventory and supply chain situation” has since improved.
“For 2024 our expectation is that it will still be a challenging environment for the bike industry,” De Ros Wallace said. “With our ambitious plans, based on performance, innovation and doing our best for the customer, we expect Canyon to continue on its growth trajectory.”
Canyon's losses also stem in part from the company making a number of investments in 2023, including opening a new headquarters in Koblenz, Germany, launching new local services and expanding its workforce.
The brand's profitability challenges come at a turbulent time for the cycling industry following the Covid boom.
Giant posted a 49% fall in pre-tax profits last month, citing high inventories and weak demand in the US and Europe.
Earlier this year, three major distributors collapsed in Moore Large, 2Pure and FLi. Online retailer Wiggle Chain Reaction Cycles then entered administration at the end of October.
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