Online cycling retailer Wiggle Chain Reaction Cycles (CRC) has posted a pre-tax loss of almost £100million in its latest company accounts, citing Brexit and the post-pandemic cycling slump as factors that hit the business.
The UK group, which is held under the name Mapil Topco Limited and covers both Wiggle and Chain Reaction Cycles web stores, recorded a loss before tax of £97,041,000 in the year to 30 September 2022. This was a significant increase from the previous year, when it lost £14,555,000.
In documents filed last month, the directors presented their report on the company’s finances, in which they noted a “challenging” economic situation in the UK.
“The Group is suffering from the aftereffects of the Covid pandemic,” Wiggle chief finance officer Adrian Bruce wrote, highlighting that the lockdowns initially led to a “pull forward of revenue”.
“UK sales have benefited from pandemic lockdowns, particularly through 2020 and 2021, and UK sales in the year to September 2022 are down by 32% due to the reduction in this benefit, although they are 7% higher than the year to September 2019 [before the pandemic],” wrote Bruce, who left the company in May this year, after the accounts were filed.
With regards to international sales, 38% of the company’s £252million annual revenue came from outside the UK. The directors, however, pointed to a fall in sales caused by Britain's exit from the EU, which became effective in January 2020.
“International sales declined by 26%,” Bruce wrote, “Driven mainly by the full year impact of Brexit reducing sales into EU, where higher duty and fulfilment costs has necessitated higher pricing.”
In December 2021, the WiggleCRC group was acquired by global sports retailer Signa Sports United, in a deal that brought “significant one-off legal and professional and staffing costs”. These adversely affected the company’s profits, with costs incurred arriving at just over £36million.
Further costs came in rebranding the Wiggle website, which was updated to a green colour scheme in April this year. According to the company accounts, the business made £14.5million in capital additions during the 2022 year, which were “mainly” investments in improving the online shop and back office systems.
Reflecting more generally on the business, the directors wrote: “The effects of the current economic uncertainty have been felt throughout the retail industry in the recent months and the future impact of these uncertainties remains difficult to predict.”
As part of the acquisition, however, Signa Sports United settled the company’s external shareholder debt and bank debt, which amounted to a total of £312.9million. The company had since drawn down €60million (£51million) of shareholder funds.
Elsewhere across the industry, Ribble Cycles reported a £5million loss for the 2022 financial year, also citing Covid and Brexit issues, but noted that 2023 has proven more stable.
Last month, UK-based cycling distributor FLi Distribution collapsed, with the owner blaming people who voted to leave the EU. This came after British children’s bike manufacturer Frog Bikes said mounting Brexit costs drove it into the red.
