Stickybottle

Rapha and Evans Cycles 60-shop chain both hit trading problems

Posted on: September 9th, 2018

Rapha and Evans Cycles hit trading problems

The clothing brand Rapha and the 60-store cycling chain Evans Cycles are both restructuring as trading difficulties set in.

 

Rapha and Evans Cycles hit trading problems

 

The UK’s upmarket cycling clothing brand Rapha and one of its biggest cycling shop businesses Evans Cycles have both hit trading difficulties.

Rapha has shed jobs and is scaling back on some of its activities as it tries to focus on increasing core profit.

At Evans Cycles management is trying to raise funds, said to be £10 million, to shore up its 60-store business.

The trading difficulties, and indeed the businesses, are unconnected. However, news around both is emerging at the same time.

The Telegraph newspaper in Britain has put the job losses at Rapha as high as 80, though the company claimed only 15 staff had departed.

And it said they had left the business on a redundancy arrangement. Rapha was sold for £200 million last year to members of the family that started the US retailing giant Walmart.

Rapha’s chief financial officer, Emilio Foa, has recently departed the business. And now a push is on to restructure and gets profits up.

Rapha, which was founded by cyclist Simon Mottram 14 years ago, sold for £200 million last year. Mottram has remained chief executive since the sale of the business.

The company’s turnover rose by 37 per cent in 2017 to £67 million as it was being readied for sale, with tax before profits at £1.4 million.

One of the businesses to close is Rapha Travel, which has been contacting clients who had booked trips for the months ahead.

Clients have been told while the cycling trips all over the world planned for the remainder of the year will go ahead, all scheduled for next year are cancelled.

One stickybottle reader received an email from the company informing him of the move.

“Sadly, we will not be running our calendar of trips for the 2019 season,”  the message said.

“We have taken this tough decision as part of a broader restructure to simplify certain areas of the Rapha business to strengthen our position and achieve profitable growth.”

Evans Cycles, which is 97 years in existence, is now owned by private equity firm ECI Partner.

The company, which has grown from one store to 60 shops and a significant online presence, now needs to raise £10 million to bring capital into the company.

It is taking advice on a financial restructuring. The move comes two years after it experienced trading issues due to slowing sales.

However, the seriousness of the problems necessitating the efforts to raise funds was not immediately clear.

Evan Cycles said last year it was bucking market trends. Sales of E-bikes had helped trade.

And the company said cycling in the UK, especially in cities, was still below rates of other countries.

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