The parent company of Wiggle, Chain Reaction Cycles, and Vitus bikes, Signa Sport United (SSU) (not to be confused with Sigma Sports), has announced intentions to restructure its business and delist from the New York Stock Exchange, citing "severe liquidity and profitability challenges" in the wake of the COVID-19 pandemic.
In what is being described as an 'accelerated strategic realignment and restructuring program," the Berlin-based company, which also owns Nukeproof bikes and more than 80 e-commerce stores across multiple sports, says it is undertaking a "performance enhancement and downsizing program," which may include "the termination or winding down of non-performing assets."
In a company statement to investors, SSU explained that the move comes after it experienced a difficult 2023 plagued by "material disruptions," amid a demand for products that remains "significantly below 2022 and pre-pandemic levels."
This comes alongside the ongoing problem of elevated inventory levels that are affecting the bike industry.
The decision to delist from the New York Stock Exchange is said to be in response to the "limited liquidity and trading volume in the company's publicly traded shares" following the business combination - or merger - with Yucaipa Acquisition Corporation in December 2021.
This was the same period at which it also acquired cycling e-commerce giant, Wiggle CRC.
"The Company’s Board of Directors has concluded that the benefits associated with being listed on the New York Stock Exchange (“NYSE”) do not justify the costs and demands of management’s time necessary to meet the Company’s US regulatory commitments," the statement explained.
SSU predicts the completion of this delisting to be completed later this month, with the full suspension of its reporting obligations to be completed by the end of 2023.
The company's share price has been on a steady decline since that merger, from $9.12 at its inception in December 2021 to $2.24 in August 2023, before plummeting to just $0.09 this week.
As part of the restructure, the statement confirms the measures will include "rightsizing of under-performing business units as well as the evaluation of disposals of non-core assets."
Perhaps worryingly for the WiggleCRC brand, the statement specifically highlights the bike segment as an underperformer, stating that it "continued to lag management expectations."
This is claimed to be due to "weaker consumer demand and elevated promotional activity [aka discounts] to rightsize inventory levels."
Our sister site Cycling Weekly reported that WiggleCRC recorded a pre-tax loss of over £97million in the year to 30 September 2022.
It is currently unclear which brands specifically SSU is planning to 'rightsize' or offload, but looking ahead, the statement suggests it is expecting the difficulties to continue well into 2024.
“As the company enters FY24, it is the belief of SSU management that the market disruptions associated with market overstock are likely to persist into late FY24 and will adversely impact the company’s ability to achieve its near-term growth and profitability targets.”
Of course, the brand isn't the first in the bike industry to experience difficulties in the post-pandemic era. Shimano, for example, a major manufacturer of bicycle components, reported a 17.7% decrease in sales for the first half of 2023 compared to the same period in the previous year. Net sales in the brand's bicycle division dropped to ¥205 billion (approximately £1.1 billion), with operating profit also down by 39.5% to ¥42 billion (around £230 million).
Elsewhere, Wahoo, a leading producer of cycling technology, also underwent multiple rounds of staff reductions as it navigated the challenges posed by the pandemic and a shifting market.
Market leading bike brand Specialized laid off approximately 125 employees in January as part of its own cost-cutting measures, while Parlee Cycles filed for bankruptcy, although appears to have since been saved.
