Alternatively - a CRC is probably what you need for an overstocked industry, and a focus there underlined by the promotion of the eCommerce guy.
I’m looking forward to the deals all this overstock should produce
No sympathy, the overcharging during the COVID boom has come back to bite them, those prices were never sustainable.
It's been said a million times on here on other threads, but an overstock and website redesign of a much less user friendly website is a bad combination
CRC wiggle weren't overcharging during the pandemic so I don't know where you got that from @airvent
It's a bit like booking a ferry to IOM when the TT is on and wondering why it's 10x more expensive.supply and demand.
Anyhow CRC wiggle isn't going anywhere yes they need to clear excess stock and turnover is down but compared to the rest of the cycling world there doing ok .
It's there other umbrella parties they will pull the plug on.
The one big shock is the Vitus brand will likely be killed off/shelved with nukeproof brand remaining
I read this yesterday, very interesting but absolutely nothing in it to support the thread title IMO.
Unless any of the forum's finance-y types care to correct me?
Good to hear we'll still be getting cheaper gear next year, but my drawers are pretty full of bargain stuff already.
The one big shock is the Vitus brand will likely be killed off/shelved
That would be surprising, it's not mentioned in the article that I can see though?
TBH that sounds more like a return to business as normal. I'd be more worried if I was an LBS or small mail-order shop. The silver lining of the last 3 years has probably been the complete lack of grey-market stuff at CRC et.al available with next day postage. People had kinda got used to paying RRP and having to wait for stuff.
The one big shock is the Vitus brand will likely be killed off/shelved with nukeproof brand remaining
Would it?
I think my Escarpe is great, but it's hard to see why it needs to exist as a separate model line next to Nukeproof and Ragley other than to give the impression of a choice. Weirdly though the Vitus bikes always seem much better value:
Entry level Escarpe - Carbon, 12-speed shimano, £1800
Entry level Reactor - Alloy, 10 speed microshift, £1800
The rest of the spec is much of a muchness.
But as above, it doesn't actually say that anyway unless there's another press release somewhere.
Nowhere in that article does it mention the demise of CRC?
Weirdly though the Vitus bikes always seem much better value:
When was the last time you saw a vitus race team etc?
Also it's purely a house brand so there is no additional margin built into the pricing to allow your LBS to sell them and do pesky things like eat and sleep indoors.
When was the last time you saw a vitus race team etc?
They sponsor Kyle Strait, Joe Smith and various lower-profile racers - as well as quite a few "influencers".
And they were lead sponsor for at least one road race team.
But yeah, they're spending a lot less than NP on that side of things.
Unless any of the forum’s finance-y types care to correct me?
Delisting is never a good sign. It can be a simple cost saving exercise, being on the NYSE is not cheap, but more often its forced onto the company due to them no longer meeting the minimum requirements. Such requirements set against basic metrics that could be used to determine a companies health. Or put another way, many delistings are because the company is in trouble. Again to reiterate, that may not be the case here, it's perfectly valid to delist if you want to save all those costs of being listed, if for example no ones trading your shares anyway, why bother?
I’d be interested to know their costs of maintaining the Nukeproof DH race team. I suspect it isn’t cheap and if it were my business, unless I could see the direct and tangible link to sales from the profile it creates for the brand, it would be on my hit list if needing to reduce costs.
I think my Escarpe is great, but it’s hard to see why it needs to exist as a separate model line next to Nukeproof and Ragley other than to give the impression of a choice. Weirdly though the Vitus bikes always seem much better value:
You're second point covers it. Vitus are the budget brand (with more conservative geometry) and Nukeproof are the premium brand. Accordingly set at 2 different price points. Ragley are the oddball niche brand that could easily just vanish one day without many people noticing (which would still be a shame)
I’d be interested to know their costs of maintaining the Nukeproof DH race team.
I think I heard a figure of $500k bandied about on a podcast recently, but that may have just been the logistical side (not athlete pay).
I think it's really good for the brand though, especially now Sam Hill's no longer fighting for enduro supremacy.
Ronan Dunne makes their bikes look very capable.
unless I could see the direct and tangible link to sales from the profile it creates for the brand, it would be on my hit list if needing to reduce costs.
It's just part of the marketing budget. You might kill the team but that £500k (or whatever) could be moved to a more an approach with better returns, rather than just being tucked away. I can't imagine that a figure of that magnitude buys you that much advert space when trying to sell across the world
Taking it (or rather the capital investment group funding them) private is a good move. SEC filing is a right pain, makes speculation rife and can thoroughly muck up a business that wants to restructure. If they can knuckle down without the glare of having to publish public forecasts & do quarterly reviews to shareholders it'll make things so much easier for them. They can also refinance at a rate that won't be governed by share price.
I looked at the SSU shares, they've gone from $6 to 9c in a year. Whether or not they wanted to delist, it was going to happen anyway.
chakaping
I’d be interested to know their costs of maintaining the Nukeproof DH race team.
I think I heard a figure of $500k bandied about on a podcast recently, but that may have just been the logistical side (not athlete pay).
I think it’s really good for the brand though, especially now Sam Hill’s no longer fighting for enduro supremacy.
Ronan Dunne makes their bikes look very capable.
They kind of need the marketing for Nukeproof - they were very much a budget brand not all that long ago, just CRC's house brand kit, but they have crept more and more into a premium space and are now flogging 12K Ebikes and carbon frames with push/EXT shocks, etc. They very much want to position themselves alongside the big brands.
It's a tough world out there for all retailers. I read it that they're just responding to the current market conditions.
SSU stock looks like it's worthless now, down 17% today.
https://www.google.com/search?sca_esv=572520602&sxsrf=AM9HkKnbP1fwyXDGnNTVpCwRvY8dR9T33w:1697023330756&q=NYSE:+SSU&stick=H4sIAAAAAAAAAONgecRowS3w8sc9YSn9SWtOXmPU5OIKzsgvd80rySypFJLmYoOyBKX4uXj10_UNDXMqTItyi3LKeRaxcvpFBrtaKQQHhwIAzeOowkkAAAA&sa=X&ved=2ahUKEwjKnLjG8O2BAxUoXUEAHdQEAsQQsRV6BAhqEAM&biw=1687&bih=1214&dpr=1
I can hold my head up high . My £169.99 to the CRC ragley safeguard fund must of helped .
You’re second point covers it. Vitus are the budget brand (with more conservative geometry) and Nukeproof are the premium brand. Accordingly set at 2 different price points.
Do they actually come out of two entirely different R&D offices though? And with two different procurement guys going to SRAM/Fox/Shimano?
On the other points (just comparing the reactor and Escarpe as they're the closest, the Mega has 20mm more travel, the reactor 10mm less):
The "budget brand" Vitus is carbon
The vitus is slacker HA
The vitus has a steeper SA
The reach is within 2mm
The RRP is practically the same
When was the last time you saw a vitus race team etc?
Yes that costs, but if your marketing budget doesn't give you a return on investment it's poorly spent. The race team might cost £500k, but unless it's a vanity project that should be paid back in extra sales.
And as mentioned by others, Vitus have several racers/riders and a road team.
Also it’s purely a house brand so there is no additional margin built into the pricing to allow your LBS to sell them and do pesky things like eat and sleep indoors.
Maybe true, but they're still CRC's in house brand (and provide most of the finishing kit for the Vitus).
I assume that they'll have to keep one in-house bike brand in order to buy Shimano, SRAM etc at prices they can still sell at and make money.
NEW YORK--(BUSINESS WIRE)--The New York Stock Exchange (“NYSE” or “Exchange”) announced today that the staff of NYSE Regulation has determined to commence proceedings to delist the two securities enumerated below (“Securities”) of SIGNA Sports United N.V. (the “Company”) from the NYSE. Trading in the Company’s Securities will be suspended immediately.
Symbol
Description
SSU
Ordinary Shares, nominal value €0.12 per share
SSU WS
Public Warrants, each whole warrant to purchase one Ordinary Shares at an exercise price of $11.50
NYSE Regulation has determined that the Company’s Securities are no longer suitable for listing based on “abnormally low” price levels, pursuant to Section 802.01D of the Listed Company Manual.
The Company has a right to a review of this determination by a Committee of the Board of Directors of the Exchange. The NYSE will apply to the Securities and Exchange Commission to delist the Company’s Securities upon completion of all applicable procedures, including any appeal by the Company of the NYSE Regulation staff’s decision.
Confirmation that it was indeed not necessarily a choice on the part of SSU.
Do they actually come out of two entirely different R&D offices though? And with two different procurement guys going to SRAM/Fox/Shimano?
I'd wager it's all the same place for R&D and manufacture (definitely sales and distribution). Different brands, same company, different markets (similar to the the different brands in the VAG group working in different markets to get a bigger overall share)
Sure I saw it said that the Vitus frames are just off the peg catalogue jobs? I'd imagine the Nukeproof and Ragley frames cost a bit more to manufacture? My Ragley was certainly a much better built and finished frame compared to my friend's Vitus.
Not sure about the other models, but when I saw the nukeproof ebike up against the Vitus E-sommet, the tube profiles looked very very similar, so I'd expect considerable manufacturing overlap.
When was the last time you saw a vitus race team etc?
Can't say I have, but I did notice there's one being ridden at Rampage.
Aren’t SSU majority owned by private equity?
I think the thread title is wrong: the Wiggle takeover was the demise of CRC. It went downhill fast (and not in a good way).
Sure I saw it said that the Vitus frames are just off the peg catalogue jobs?
Some of the road and gravel bikes may be, and maybe some of the cheap hardtails (and that xc FS bike), but I'm sure the Sommet and escarpe are bespoke to them.
Neil from SuperstarComponents. Note these are just my opinions based on publicly listed information, don’t hold me to this.
looks bad. Very bad
If a corporate says they have severe liquidity problems publicly they are unlikely to be in a good place!
Last I read CRCwiggle group lost £90 odd million last financial year and made some bonkers excuses about it sploshing tens of millions on a website (how? Incompetence?) I suspect this years financials will be considerably worse if it ever comes out. Look at companies house and there’s the usual schenanigans of multiple companies shifting losses around
They are clearly dumping stuff like crazy for cash flow. Lots of stuff sold well below manufacturing cost. Flogging £55 chainrings for £8 for example
looking at the claims Signa was delisting of its own choice then the NYSE saying they were delisting them looks even more shady. A rather clumsy attempt at PR brushing over a shitstorm. In a nutshell the company has lost 98.5% of its entire value in a single year, this doesn’t point to health!
market cap of $35 million according to google. That could evaporate in days if contagion digs in. It reflects the sheer amount of money burning and debt at risk if you annihilate a few billion dollars in market cap in under a year!
so does this mean loads of bargains? Well they are flogging them now and I doubt they are ordering more stuff to replace it.
taiwan bike factories are working 2 day weeks as demand has nosedived. This doesn’t mean cheaper prices it means they aren’t making anything!
what might happen next? Well these big companies are based on debt funding. So everything’s hunky dory till your lender pulls the money and you go pop instantly. If your bank has lost 98.5% of its value in a year I doubt it can raise more money to burn.
wont be the first or last. It’s going to be an interesting year…
There's a few videos on YouTube touring the offices and talking about the design of their full suss frames. Maybe an elaborate rouse but seems genuine.
The race team might cost £500k, but unless it’s a vanity project that should be paid back in extra sales<br /><br />
I imagine it costs a lot more than that to run a dh team even excluding the riders salaries. There’s alot travel costs, team staff and vehicles to fund
Didn't an ex CRC employee post a scathing letter on social media a few months outlining how badly things had gone wrong there?
Didn’t an ex CRC employee post a scathing letter on social media a few months outlining how badly things had gone wrong there?
Probably. I'm sure if you looked you'd find an employee of Starbucks or McDonald's telling you the same and how the business was going to go bust in a year.
Most people in a business of that size haven't a clue what is going on because it's simply nowhere near their job. If its their ex FD writing that letter it might have merit, if its one of their web designers or warehouse staff, probably not, it's just their timing makes them look like a savant.
It was someone senior. I'm trying to find it but it basically said the Wiggle merger had been an absolute disaster
It was someone senior. I’m trying to find it but it basically said the Wiggle merger had been an absolute disaster
Wonder if that opinion was predicated mainly on the their job being duplicated and thus made redundant. They might have been absolutely right, but likely they just had an axe needed grinding.
They seem to have done just fine for the five or six years since the merger up to 23. Covid bubble might hide some of that of course but equally 22/23 is not a good time to be significantly in debt or in certain industries. There will be a lot of otherwise viable businesses in multiple sectors gone by the time all of this blows over.
said the Wiggle merger had been an absolute disaster
When Bridgepoint bought them in 2011 it paid £180m (well over a 10x sales valuation) and had to beat off several interested buyers. When Signa bought Wiggle/CRC from Bridgepoint it settled over £300million in external shareholder and Bank debt..
had to beat off several interested buyers
There was stiff competition, eh?
"There was stiff competition, eh?"
Survival of the stiffest.
Bunch of children 🤣
There’s a few videos on YouTube touring the offices and talking about the design of their full suss frames. Maybe an elaborate rouse but seems genuine.
One thing that was mentioned on the owners group is the Escarpe and Sommet share a front triangle, which is entirely believable as the Escarpe head/downtube looks comically overbuilt with a 34mm fork.
How companies go from success to self inflicted suicide is often a retrospective article on the FT or a Radio 4 podcast. It's both fascinating and sad to watch in real time via the medium of the company website.
One thing that was mentioned on the owners group is the Escarpe and Sommet share a front triangle, which is entirely believable as the Escarpe head/downtube looks comically overbuilt with a 34mm fork.
Carbon molds cost a lot. If you can use the same molds with new layups and inners to give different weights/rides then you can save a ton of money.
When Bridgepoint bought them in 2011 it paid £180m (well over a 10x sales valuation) and had to beat off several interested buyers. When Signa bought Wiggle/CRC from Bridgepoint it settled over £300million in external shareholder and Bank debt..
Isn't that how private equity works? A PE company buy CRC, get CRC to pay for the loan for itself while the PE company strip out anything of value, often leasing property of other assets back to CRC at an inflated rate. Eventually CRC can't handle the debt burden anymore and it either gets sold (to another PE firm to rinse a bit more value out of it) or liquidated.
Perhaps I am just a bit cynical about it all.
The old e Sommet / Escarpe certainly looked superficially similar to the Motobecane Hal E.. but there are differences like the rocker and seattube brace. Maybe there are just made in the same factory and share certain bits like the shock tunnel...
Isn’t that how private equity works? A PE company buy CRC, get CRC to pay for the loan for itself while the PE company strip out anything of value, often leasing property of other assets back to CRC at an inflated rate. Eventually CRC can’t handle the debt burden anymore and it either gets sold (to another PE firm to rinse a bit more value out of it) or liquidated.
Perhaps I am just a bit cynical about it all.
I often find that in business, a cynical approach is the best one to take...
I certainly remember a lot of people with more experience of big business than your typical bike trade bod (myself included) reporting that short term gain would likely equal long term pain for CRC when they were taken over by Bridgepoint back in 2011, and then again more so with the more recent Wiggle takeover.
The phenomenon as we know it is simply "boom and bust"... It's ALWAYS far more healthy for your long term goals to build slowly and organically (as CRC did, relatively speaking, prior to the Bridgepoint takeover) than it is to hurry the process by bringing in outside investment...
for CRC when they were taken over by Bridgepoint back in 2011, and then again more so with the more recent Wiggle takeover.
Wasn't it wiggle sold to bridgepoint in 2011, then crc bought in 2016.
Signa buying both in 2021.
Not that it makes much odds mind, your point stands.
There’s probably a fair chunk of that £300m down to goodwill and other intangibles. Pity the person who’s going to have the impairment review as to why the millions have evaporated.
How the hell does a business lose £1.5 million every week (£200k per day!)?? Mind boggling.
Wasn’t it wiggle sold to bridgepoint in 2011, then crc bought in 2016. Signa buying both in 2021.
Yes, apologies, got myself in a muddle there...
How the hell does a business lose £1.5 million every week (£200k per day!)?? Mind boggling.
We've all seen Wolf of Wall Street, right...? It's not that that amount of money is being lost per se, it's that the value of the business was at some time grossly overstated, but people bought into the hype, and the reality is now dawning as to how fragile the investment was for some given the fragility of the market currently...
I am not casting aspersions here, but if I didn't know better, it would look like old school "pump and dump" tactics by money men who knew what they were doing!
How the hell does a business lose £1.5 million every week
On management fees to its owner? Owner's happy, company then goes bust. Owner has made millions and does the same again. See also Evans of old
The rule of mergers is that benefits seem obvious, costs are hidden.
It’s also often a sign of a lack of ideas from management.
NYSE market price currently around 1.8c per share...
Closed at 9.4c per share yesterday...
ouch
They won’t be losing £200k per day everyday. They will have had loads of stock on their looks listed as assets at covid prices. At some point they will have admitted that they can’t sell eg a thousand mega frames for £3k each. When they admit that they can only sell the frames for £500 each they have to declare that as a loss in the value of the assets. For the frames that would be a loss of £2500x1000 so a loss of £2million. Repeat that across all the inventory you can see where the losses come from!
Sigma no doubt borrowed against the value of the inventory to fund their continued stream of acquisitions now will be in trouble. Wiggle CRC are such dominant brands and with a seemingly good logistical back end it’s hard to see them disappearing. A discounted sale, management buy out, pre-pack administration etc. feels more likely!
Agree with others, vitus is the budget brand with Nukeproof trying to compete in the mid market. As others have said, vitus frames tend to be either open mould or modifications or, like the escarpe and sommet, have simpler cheaper designs like the shared front triangle. These allow wiggle to sell decent bikes for cheap, but with more aesthetic/performance compromises. Nukeproof have custom frames and more marketing, dealers etc, adding cost but giving a slightly nicer product that they hope to be able to sell with more margin.
Minus that’s totally incorrect. The value of stock is at purchase cost not achievable value. To make a loss their sale price minus costs of sale must be negative
<br />According to accounts they have been losing money for years (obviously multi company opaqueness complicates things) it’s easy to be number 1 when you make a loss on sales . Dominating doesn’t equal profitability
I hate to know the cost of the marketing spend on their house brands and race teams. Sure it might increase sales but if you spend a million on adverts you need to sell 5 million more just to break even. Then when they dump their key products at manufacturing cost, it doesn’t even look like the brand is that attractive anyway
yes they could be lining up for a prepack but who would want to pour a few hundred million into the already obvious money pit? Maybe when you can borrow at 0.5% but right now its brand value isn’t looking attractive value
neil SuperstarComponents
Sure, that’s how it would work in a simple business. But my assumption would be that the manufacturing entity would sell inventory to the retail entity at close to the realisable market value, allowing the manufacturing entity to book a profit quickly (or at least offset some of the marketing losses) leaving the retail entity with relatively highly valued inventory. I have no inside insight though, so I could well be wrong.
I agree that sigma sports would be unlikely to come out of a pre-pack as is. Some of the brands will likely be sold off or parked, and the uk retail operation is likely to have to slim down potentially with different ownership than other parts of the existing empire. I’m not trying to say the existing business makes sense in its current form.
I agree that sigma sports would be
SIGNA Group, not Sigma Sports which is a completely different entity.
Maybe if they get Trump's accountant to do the stock-take.
Anyways, when's the CRC fire sale? Or should that be flood sale (slight return).
Errr CRC WIGGLE doesn’t make anything!
they buy it from vendors and retail it with a margin. So no minus that’s not how it works, quite the opposite. If you are both the manufacturer and retailer your stock is a raw material prices. You don’t make ANY profit till it’s sold, otherwise you would end up paying huge corporation tax for stuff in your warehouse!
so buy a frame for £500 inc shipping then sell for £1500 (inc vat). What they are doing is binning them out at say £400 so they make a loss to gain cash flow to pay bills. note all your other running costs are onto of this like shipping/staff/rates/property/packaging etc
so if they lost on average £200k a day then yes that’s what they have done
Margin is normally about 20-30%, I read last qtr signa group’s margin is negative 40% which is insane
neil SuperstarComponents
Errr CRC WIGGLE doesn’t make anything!
I presume he meant that "components ltd" could be making a pair of bars for £10, selling them to "cycles ltd" for £50, then the bike was sold to "shop ltd" for £3500, who sold it to Joe Blogs for £3500, and posts a £200k loss every day as a result. Where all three companies are owned by the same holding company intent on rinsing the asset of all it's money then declaring some part of it insolvent, wiping off all the debt and keeping the rest.
It's not unheard of, but you'd need to sit down with the accounts and nice fresh red pen to be sure otherwise it's dangerously close to some very expensive liable.
A long time ago. They’re very much designed by Chiggle now.
Pretty sure someone said on the Vitus Rapide thread that the frame was the same as some other brand and could be bought direct from China? Could easily be mistaken though.
Pretty sure someone said on the Vitus Rapide thread that the frame was the same as some other brand and could be bought direct from China? Could easily be mistaken though.
They said on this thread - I stand corrected.
The UK's use of financial reporting standards requires that stock valuation has to be at the lower of cost or net realisable value; so if there's a drop in value below what you paid for it, you have to re-value your stock current asset there and then. That can clearly affect a company balance sheet within the current year and knock a hole in your management accounts.
Now they could be doing some Starbucks esque profits shifting but that would show up in the turnover vs cost of sales on companies house. They appear to be operating normally in that respect
so no. They appear to just be making losses. Also the group overall margin according to online is negative 40%, the whole shabang looks like they are liquidating stock for cash flow as corroborated by Signa press release comments about very negative cash flow
so in summary it’s bad. Based on published public statutory information not hearsay or guesses <br /><br />
talking with my taiwan friends they are all saying demands from crazy payment terms have been asked for, points to cash flow issues. Obviously this is third hand but I trust them as they have nothing to gain from their statements
neil SuperstarComponents
For a long time they dominated the market, but it’s very hard to compete with the drop shippers.
Who are these drop shippers in the cycling world? Essentially doing to online retailers what those did to bike shops?
Always thought what would be left with if everyone bought £4 chainrings etc. from Aliexpress.
If this is all doom and gloom, what about the forum sponsorship and the prize draws here? Aware this is way down the line compared to other issues, but just curious about everything else tied into the company.
AliExpress etc is very interesting. I’ll be straight up it’s taken a huge chunk of our small item sales where people are only interested in price not quality. Hence our move to other markets. <br /><br />
I read that 30% of ALL small packages going into the USA are shein and temu sales. This is utter insanity caused by low value import exemptions and state supported postage in China. The EU and eventually the U.K. solved the import exemption problem but they can still ship for less direct from China than within the U.K. to the U.K.
before you get into the claims that these cheap goods are subsidised by the Chinese government as a proxy to harvest your data and put malware on your phone . But the stuff is cheap…
basically if you don’t support U.K. businesses making stuff here and paying lots of taxes here, then they won’t be here in future. Then when you want government services paid for by companies taxes they won’t be here either. It’s your choice. <br /><br />
neil SuperstarComponents
I know I wildly speculated on the last thread about CRC/wiggle that signa might try to use them as some sort of bucket, to dump the wider group's losses into a UK based business maybe. But could that be what they've actually done?
Insulate the rest of the group, internally sell stock at cost?, then allow discount sales to keep cashflow moving. then ultimately blame the self harming mentalists in Blighty, asset strip and then cut them loose? Are there any other benefits of bankrupting a business you happen to own in the UK Vs the EU?
I'm also pleasantly surprising that ST are okay with us speculating on the demise of the company that they've just taken on as a major sponsor for the site...
AliExpress etc is very interesting. I’ll be straight up it’s taken a huge chunk of our small item sales where people are only interested in price not quality. Hence our move to other markets.
The tide may be turning a bit here maybe.... I recently needed a 107BCD chainring - the only place I could find one was on Aliexpress @£40 or so. SS can surely compete with that?
