Chainreactioncycles has a store in Belfast (above) and Ballyclare, but its online presence has been the driver of its growth.
Chainreactioncycles.com has seen sales increase by 14 per cent as cycling continues to boom in Ireland and across the global, though the Irish company’s drive to expand has seen profits plummet by 90 per cent.
Its just-published annual results for 2012 reveal revenue has jumped by 14 per cent to £156 million, or €185 million.
Of this, some 59.5 per cent originated from the EU while the remainder came from the rest of the world. This compared to 61 per cent of sales coming from inside the EU in 2011.
The increased sales were achieved despite recessionary conditions in most large marketplaces among the estimated 100 countries it sells into.
The number of people employed by the company, which is a co-sponsor of Sean Kelly's An Post team, increased by 32 per cent last year from 465 to 614, a development that drove higher operating costs and adversely impact profits.
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Shareholders received a dividend of €3 million in 2012 compared to €3.6 million in 2011.
While the Antrim-based online retailer posted pre-tax profits of £10 million in 2011, that figure plummeted by 91 per cent to £861,000 last year. The fall was primarily due to a number of one-off costs related to its expansion drive in the year to the December 31st, 2012.
As well as increasing its workforce so significantly during 2012, it also absorbed a new website into its operations; the Cork-registered Chain Reaction Cycles Ireland Ltd it established in 2011 to provide transaction processing services on behalf of the group.
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It invested significantly in research and development and expanded its own-brand range of products. In June of last year it bought BMX bike manufacturer Ruption for £1.7m.
According to the directors’ report, gross margins were maintained at 32 per cent during 2012. However, the company, which says it is the largest online cycling retailer in the world, incurred substantial additional overheads which had impacted its profits in the trading year.
“The directors deem this an acceptable performance as they are satisfied the outlay is necessary to build the foundations for future growth,” the report noted.
“The group has invested significant resources in research and development. At the forefront of this work is the creation of a unique and innovative e-commerce platform, designed to enhance functionality and all aspects of the buying experience.”
Founded as Ballynure Cycles in 1984 by George and Janice Watson in the village of Ballynure in Co Antrim, the company expanded from its retail model into catalogues where customers could order and receive their goods via the postal service.
This model left them ideally placed to take advantage of the exponentially growing internet at the turn of the millennium, with chainreactioncycles.com launched in 2000 and growing hugely since then.
It now runs a 10,000 sq ft flagship store in Belfast and a second store in Ballyclare, Co Antrim, where its main warehouse is located.
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