Cycling retail giant Sigma Sports has recorded a pre-tax loss of £4.1million for 2022, citing a “challenging year for retailers in the UK”.
The company’s latest accounts, which were released last week and cover the year up to 31 December 2022, reveal a pre-tax loss of £4,151,345, down from a profit of £6,584,733 in the year before.
“FY22 was a challenging year for retailers in the UK,” wrote finance director Oli Lawson, “as businesses had to deal with the economic environment post Covid-19 which was compounded by Russia’s invasion of Ukraine in March, rising interest rates and the fallout from September’s mini budget - all factors contributing to a decline in consumer confidence.”
It is the first time Sigma Sports has failed to post a profit since 2016, when its accounts showed a pre-tax loss of £236,176.
Sigma Sports CEO James McEuen said: "We had to drop prices (like everyone else) thereby making a loss. This was intentional and carefully controlled.
"We also continued to invest with the opening of a new Electric Bike store, as well as seeing growth in own brands Vel+ and Universal Colours."
Still, Sigma Sports was one of many companies that have felt the effects of the slump that followed the cycling boom of 2020 and 2021, when more people turned to bicycles during the pandemic.
The economic downturn has led to a number of British companies collapsing this calendar year. Among them were clothing brands Milltag and Presca, as well as wholesale distributor Moore Large.
Earlier this month, Wiggle Chain Reaction Cycles (CRC) posted a pre-tax loss of almost £100 million, citing Brexit as a factor that hit the business.
Lawson said 2022 brought a "slight contraction in size" of the cycling industry.
The company reported a fall in revenue to £55.8 million in 2022, down from £74.6 million in 2021.
In 2023, Sigma Sports has prepared “prudent cash flow forecasts”, and has stripped back its stock, with any surplus items “being unwound in FY23”.
McEuen said: "This year the market is on track for a 17% decline vs 2019 with mechanical bike sales down by 30%, which is pretty sobering.
"However, this year our sales performance has been 32% up on 2019 and mechanical bikes are up an outstanding 161%. Granted, we have opened Oakham and Kingston since 2019, which does boost the comparison between then and now, but even if we discount those stores we are up 16% on 2019 and bikes are double our prior output."
He added the business was "firmly looking forwards" after a "tough year" in 2022.
"Historically, cycling is notoriously cyclical, and often counter-cyclical to the economy, so we are focusing on being in the best place possible to ride the recovery; after all it’s not as though fewer people are cycling and our loyal road and gravel customers lead the charge," he said.
Speaking to Cycling Weekly in April, Sigma Sports co-founder Ian Wittingham expressed his optimism for the industry, explaining that market demand for high-end road bikes is “really strong”.
“We simply can’t get enough high-end Specializeds, Treks and Cannondales,” Wittingham said. “We’re [also] seeing strong, continuous demand for e-bikes.”
