A huge sale of Wiggle Chain Reaction outlet products has begun at Evans Cycles, with cyclists able to take advantage of discounts of up to 70 per cent on the ill-fated brand’s stock. In the same week, Wiggle’s administrators revealed that Mike Ashley’s Frasers Group had bought the retailer’s intellectual property rights for just £3 million, well below the originally reported price of £10 million and only after a private equity fund moved in withdrew from the purchase at the last minute.
At the Cheetham Hill, Manchester branch of Evans Cycles, which is part of the Frasers Group’s vast retail empire which also includes Sports Direct and now Wiggle, local cyclist Arron Borson reported on social media that the entire top floor of the store had been dedicated to Wiggle CRC outlet products, complete with a sign reading ‘Wiggle Outlet sale, up to 70% off’.
According to the images, Kask Protone racing helmets, which retail for around £200, are being sold for £40, while Arron said some e-bikes are priced at £250. The sale includes Castelli and DhB clothing, and boxes of smaller items and accessories such as pumps and lamps are also pictured, with prices starting from just £1.
The extent of Evans’ heavy discounts on Wiggle’s remaining shares will come as no surprise after it was revealed this week that Frasers Group completed the sale of the beleaguered retailer’s intellectual property rights in February for just £3 million plus VAT.
That figure is well below the figure, believed to be “less than £10 million”, first reported for the purchase, which marked the culmination of a turbulent period for Wiggle CRC after it went into administration in the wake of the financial crisis stated. the now bankrupt Berlin parent company Signa Sports United (SSU) was flooded. By comparison, SSU’s purchase of Wiggle CRC from Bridgepoint, in 2021, was reportedly worth around £500m.
According to a document filed at Companies House this week by Wiggle’s administrators FRP Advisory, detailing the sale process, of the 58 parties initially interested in purchasing the online retailer, 24 have signed non-disclosure agreements, while only seven have left the management team met at least once. .
According to the administrators, Wiggle CRC’s shareholding was valued at £22m in November and its intellectual property was valued at around £4.5m.
> Final clearance as Wiggle Chain Reaction Cycles invites bids for remaining warehouse stock
In December, an offer made by a private equity fund with “global operations” was accepted by the managers, with a deal – which would have meant Wiggle CRC remaining a going concern – due to be completed on December 19.
However, despite “significant due diligence” by the administrators, the proposed buyer withdrew its offer on the day the sale was due to be completed.
“As a result of this withdrawal, the administrators were forced to make temporary changes to stabilize the business and ensure the Christmas trading continued to be profitable,” the report said.
After the sale process resumed in January, three parties remained interested in continuing Wiggle as a going concern, while one party – which turned out to be Frasers Group – retained only their interest in the company’s intellectual property.
> Wiggle website relaunched after Frasers Group takeover (and the old orange logo is back)
While the interest indicates that there was a belief within the industry that Wiggle CRC could remain stable in the future, the administrators note that the inability to keep the company’s fixed overheads, and in particular its cumbersome IT infrastructure, ” “the right size” meant it could no longer be sold as a going concern.
According to the report, Wiggle’s IT infrastructure was “built on the assumption that the company would achieve sustainable annual revenues in excess of £1 billion. In reality, the company did not achieve these sales levels even during peak sales driven by Covid-19 trading.”
“The inflexibility of the IT infrastructure ultimately caused all parties that were considering a continuity purchase to drop out,” says FRP Advisory.
Ultimately, Frasers Group managed to acquire Wiggle “on a ‘gone concern’ basis” for just £3 million plus VAT, adding the name and its own brands to their bulging retail portfolio.
“An initial payment of £2,625 million was made on completion, with an agreed retention payable once all necessary intellectual property transfers had been completed,” the report said. “This aspect has been successfully completed and the balance of the compensation has been paid in full.”
An accelerated closing sale conducted by the administrators, reported by road.cc, also saw FRP Advisory able to “maximize the outcome” for the brand’s creditors, by shifting all warehouse stock four weeks ahead of schedule.
Since the purchase, which included the rights to Wiggle CRC’s own brands such as Nukeproof, Vitus, Lifeline and DhB, Frasers relaunched both the Wiggle and Chain Reaction websites in March as part of its bid to “become the No. ”. Sports goods retailer in Europe”.
“In addition to the relaunch of e-commerce, Frasers Group aims to create commercial partnerships to strengthen and expand these own brand lines through development, sales, licensing and international distribution capabilities,” the group said at the time.
“Wiggle and Chain Reaction are household names among motorcyclists in the UK and across Europe and the acquisition of both brands is consistent with our ambition to become the No. 1 sporting goods retailer in Europe,” said Russell Merry, managing director of Wheels for Frasers . Group, added.
“It also brings the opportunity to work with respected partners through the highly admired, award-winning product lines that Wiggle and Chain Reaction had built. We are excited to explore partnerships with suppliers or distributors looking to expand their offering or with an organization looking to gain a foothold in the market by leveraging some of the established names.”
That relaunch took place after all 447 remaining employees of Wiggle CRC were made redundant in February when administrators “battened the hatches” in the wake of the intellectual property rights purchase.
The saga began last fall, when WiggleCRC was put into receivership and put up for sale following a financial crisis that engulfed Berlin-based parent company Signa Sports United (SSU), resulting in the elimination of 105 jobs at Wiggle, another online retailer. Chain Reaction and distributor Hotlines, and the company owes almost £27 million in debt to 400 creditors.
SSU’s crisis was caused by its own parent company, Signa Holding, scrapping a €150 million funding commitment, leaving Wiggle and other cycling companies such as Bikester, Probikeshop and Farrhad.de in limbo.
SSU subsequently filed for bankruptcy, ushering in bankruptcy and months of decline and layoffs for Wiggle and Chain Reaction, despite continued claims from management that they were “optimistic” about a sale.
> “The assumption was that Wiggle Chain Reaction wouldn’t go anywhere”: Ex-employee on the road talks about “shock” at retail giant’s demise.cc Podcast
On a recent episode of the road.cc Podcast, we heard from a former employee who spoke about the “shock” of staff at the demise of the retail giant.
“Everyone was convinced: this is it, we are one of the largest bicycle retailers. We’re about to make a big splash in America, and then I thought, ‘Oh, this might not be smooth sailing, this isn’t good,’” said the ex-employee, who worked for one of the WiggleCRC’s internal brands told us about its response to the funding commitment being withdrawn.
“But I don’t think anyone thought this would close the business. Suddenly the bubble burst, and you have a train that you’ve got going full speed, and you’re driving it flat out, and then suddenly someone tells you that you’ve gone off course. It was chaos, and you could see that everyone was up against it. And I think the £150 million combined with that – even with the £150 million, there’s no guarantee that we would have survived. Maybe it’s gotten too big.”
The former employee said the ‘arbitrary’ job cuts ‘appeared to have been brutally handled’, with the administration meaning staff members also did not receive their minimum notice period.
“So they went from ‘I have to get this report in by one o’clock’ to ‘sorry.’ And 15 minutes later they’re sitting in a car in the parking lot asking ‘what just happened?’” he said.
“Everyone believed this would work. We were too successful, we made too much money, we were too good at this. It’s not like there was another competitor in the same market in Britain. Maybe you’re one of the unlucky ones who got cut, but the premise was: Wiggle Chain Reaction wasn’t going anywhere.
The ex-employee also claimed that staff were told the company was likely to be sold to a private equity firm, and that management even insisted in meetings: “Don’t worry, Mike Ashley isn’t buying us.”
“Even when we closed, there was no talk of Frasers Group, of Mike Ashley,” he recalls. “We found out through the media, which is wild.
“Until the end there was the assumption that someone would buy us. Because you can run a brand with ten people. And the idea that someone would definitely love Vitus, NukeProof, dhb, any of these, someone would definitely want to keep some people and those brands. But the fact that everyone was let go means those brands are gone.”