A massive clearance sale on Wiggle Chain Reaction outlet products has begun at Evans Cycles, with cyclists able to avail 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 purchased the retailer’s intellectual property rights for just £3 million, far below the originally reported £10 million price and only after a private equity fund pulled out of the purchase at the last minute.
At the Cheetham Hill, Manchester branch of Evans Cycles, which forms part of Frasers Group’s vast retail empire that also includes Sports Direct and now Wiggle, local cyclist Arron Borson reported on social media that the entire top floor of the store was dedicated to Wiggle CRC outlet products, complete with a sign reading, ‘Wiggle Outlet sale, up to 70% off’.
According to the images, Kask Protone road helmets, which retail for around £200, are being sold for £40, while Arron said some e-bikes were priced at £250. The sale includes Castelli and DhB clothing, and boxes including smaller items and accessories such as pumps and lights can also be seen in the photos, with prices starting at just £1.
The extent of Evans’ heavy discounting of Wiggle’s remaining stock will come as little 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 £3m plus VAT.
That figure falls far below the sum, 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 was plunged into administration in the wake of the financial crisis that engulfed its now-insolvent Berlin-based parent company Signa Sports United (SSU). In comparison, SSU’s purchase of Wiggle CRC from Bridgepoint, in 2021, was reported to be worth around £500m.
According to a document filed at Companies House this week by Wiggle’s administrators FRP Advisory, outlining the sales process, of the 58 parties initially interested in purchasing the online retailer, 24 signed non-disclosure agreements while just seven met with the management team at least once.
According to the administrators, Wiggle CRC’s stock holding was valued at £22m in November and its intellectual property was valued at around £4.5m.
> Final clear out as Wiggle Chain Reaction Cycles invites bids for remaining warehouse stock
In December, one offer, made by a private equity fund with “global operations”, was accepted by the administrators, with a deal – which would have meant Wiggle CRC remained a “going concern” – set to be completed by 19 December.
However, despite the “considerable due diligence” of the administrators, the proposed purchaser withdrew their offer on the day the sale was set to be completed.
“As a consequence of this withdrawal, the administrators were forced to pivot temporarily to stabilise the business and ensure that Christmas trading could be maintained profitably,” the report says.
After the sales process recommenced in January, three parties remained interested in continuing Wiggle as a going concern, while one – which turned out to be Frasers Group – retained their interest in the company’s intellectual property only.
> Wiggle website relaunched following Frasers Group takeover (and the old orange logo is back)
While the level of 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 “right size” the company’s fixed overheads, and in particular its unwieldy IT infrastructure, meant that 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 £1bn. In reality the company did not achieve these revenue levels even during peak sales through Covid-19 trading.”
“The inflexibility of the IT infrastructure ultimately caused the parties considering a going concern purchase to all fall away,” FRP Advisory said.
In the end, Frasers Group were able to swoop to buy Wiggle “on a gone concern basis” for just £3m plus VAT, adding its name and in-house brands to their bulging retail portfolio.
“An initial payment of £2.625m was paid on completion with an agreed retention to be paid once all necessary transfers of the intellectual property had been concluded,” the report says. “This aspect was successfully concluded and the balance of consideration has been paid in full.”
An accelerated closing down sale carried out by the administrators, reported by road.cc, also ensured that FRP Advisory were able to “maximise the outcome” for the brand’s creditors, shifting all warehouse stock four weeks ahead of schedule.
Since its purchase, which included the rights for Wiggle CRC’s in-house brands such as Nukeproof, Vitus, Lifeline, and, DhB, Frasers relaunched both Wiggle and Chain Reaction’s websites in March, as part of its bid to “become the no.1 Sporting Goods retailer in Europe”.
“Alongside the e-commerce relaunch, Frasers Group is looking to create commercial partnerships to enhance and expand these own-brand lines through development, sales, licensing, and international distribution opportunities,” the group said at the time.
“Wiggle and Chain Reaction are well established names among riders 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,” Russell Merry, managing director of Wheels for Frasers Group, added.
“It also brings with it 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 an organisation looking to get a foothold in the market by leveraging some established names.”
That relaunch took place after all 447 of Wiggle CRC’s remaining employees were laid off in February as the administrators “closed the shutters” in the wake of the intellectual property rights purchase.
The saga began in the autumn last year, with WiggleCRC entering administration and being put up for sale following a financial crisis that engulfed its Berlin-based parent company Signa Sports United (SSU), resulting in 105 jobs being cut at Wiggle, fellow online retailer Chain Reaction, and distributor Hotlines, and the company owing almost £27 million in debts to 400 creditors.
SSU’s crisis was prompted by its own parent company, Signa Holding, removing a €150 million funding commitment, plunging Wiggle and other cycling businesses such as Bikester, Probikeshop, and Farrhad.de into uncertainty.
SSU then filed for insolvency, ushering in administration and months of decline and redundancies for Wiggle and Chain Reaction, despite persistent claims from management that they were “optimistic” of a sale.
On a recent episode of the road.cc Podcast, we heard from a former employee who spoke of staff’s “shock” at the retail giant’s demise.
“Everyone was convinced, this is it, we are one of the biggest bike retailers about. We’re about to go massive in America, then it was like ‘Oh, this might not be plain sailing, this is not good’,” the ex-employee, who worked for one of WiggleCRC’s in-house brands, told us of his response to the withdrawal of the funding commitment.
“But I don’t think anyone thought this was going to close the company. Suddenly the bubble burst, and you’ve got a train you’ve geared up to full speed, and you’re driving it flat out, then suddenly someone tells you you’ve run out of track. It was chaos, and you saw everyone hitting that. And I think the £150m combined with that – even with the £150m, there’s no guarantee we would have survived. Maybe it got too big.”
The former employee said the “random” job cuts seemed “brutally handled”, with administration meaning staff members did not receive their minimum notice period either.
“So they went from ‘I have to get this report in by one o’clock’ to ‘sorry’. And fifteen minutes later they’re sitting in a car in the car park going ‘what has just happened?’,” he said.
“Everybody believed this was going to work. We were too successful, we make too much money, we were too good at this. It’s not like there was another competitor in the same market in the UK. You might be one of the unlucky ones who got cut, but the assumption was: Wiggle Chain Reaction wasn’t going anywhere.”
The ex-employee also claimed that staff were told that the company was likely to be sold to a private equity firm, and that management even insisted in meetings: “Don’t worry, Mike Ashley is not buying us”.
“Even when we closed, there was no talk about Frasers Group, about Mike Ashley,” he recalled. “We found out through media outlets, which is wild.
“Right until the very end, there was the assumption someone was going to buy us. Because you can run a brand with ten people. And the idea that someone would surely love Vitus, NukeProof, dhb, one of these, surely someone would want to keep a few humans and those brands. But the fact everyone was let go means that those brands are gone.”