JD Sports Fashion and Sports Direct International (SDI) are both reported to have tabled indicative offers for Evans Cycles, a British bicycle retailer with about 60 stores. Sky News reported this week that the two British-based sports retailers would compete in the sale with Halfords, another British cycling specialist, and several financial investors.
JD Sports is already involved directly in the bicycle trade through Go Outdoors, the group of large-scale outdoor and bicycle stores acquired nearly two years ago. Sports Direct made another acquisition two months ago by buying assets from the administrators of House of Fraser, a British department store group (read an update in this issue).
Amid the brutal conditions in the British retail market and competition from online retailers such as Wiggle, Evans Cycles has racked up pre-tax losses of over £8 million (€9.0m-$10.4m) in the last two years and is said to require more than £10 million (€11.3m-$13.0m) in fresh capital to go through the next months of trading.
The current owner of Evans Cycles is a private equity firm, ECI Partners. The owner and the bankers are apparently unwilling to make a cash injection, leading to the search for a buyer who could meet the bicycle retailer's ongoing funding requirements.
While the interest from JD and SDI was reported this week, Halfords was already said to have tabled an offer last month. Cycle Surgery has been quoted by The Guardian as another potential buyer. This British retailer is part of Outdoor and Cycle Concepts, the British arm of A.S. Adventure, along with Cotswold Outdoor, Snow and Rock, and Runners Need.
Evans Cycles is a very familiar fixture in British retailing, since its first store was opened in 1921 in southeast London. The ownership was taken over in 2015 by ECI, which purchased it from Active Private Equity. The retailer is led by Alan Fort, who has been interim chief executive since the departure of Andy King in April.
Filings by the retailer's parent company, April Topco, indicate that its turnover increased by nearly 2 percent to £138.8 million (€156.8m-$180.3m) for the year until Oct. 28, 2017. It reported an operating loss of £8.8 million (€9.9m-$11.4m), but its adjusted Ebitda amounted to £2.0 million (€2.3m-$2.6m), down from £2.2 million the previous year.
Halfords is the leading British motoring and bicycle retailer. The company reported sales of £1,135.1 million (€1,282.0m-$1,474.6m) last year, consisting in retail sales as well as motoring, car maintenance and travel solutions. For the 20 weeks until Aug. 17, the group reported a comparable sales increase of 2.8 percent. Pushed up by electric bikes, comparable sales in cycling retailing were up by 0.8 percent, as a strong peak summer period offset the impact of poor weather at the start of the year. The group has moved into online retailing as well, which increased by 11.3 percent for the 20 weeks.
