Rapha makes redundancies as US office closes in "realigning" of business due to "current market dynamics"

Rapha has closed its US office and made staff redundant as part of a sudden "realigning" due to "current market dynamics" and to "better reflect our strategic priorities".

The news was broken by Velo, the clothing brand laying off six of the eight employees who worked at its Bentonville office in Arkansas, one of the remaining two employees to move to a different role in the company and the other to continue, working remotely.

According to Rapha's CEO Francois Convercey: "We are realigning Rapha to better reflect our strategic priorities and current market dynamics. Over the past five years, Rapha has experienced significant growth and these recent changes will focus us on accelerating towards our purpose of inspiring the world to live life by bike.

"Organisational changes are always challenging, and I want to extend my gratitude to everyone at Rapha for their hard work — we will do everything we can to support those affected by the organisational changes. US roles in Bentonville were impacted due to the consolidation of resources in London, but NWA [Northwest Arkansas] will remain the home of our North American Headquarters."

A former employee, who gave their account anonymously, said they were "terminated for non-performance reasons" upon arriving at work on Wednesday, the Bentonville office which has been in operation since 2020 to close with the job cuts. The latest redundancies follow similar cuts in 2018 and last September, Rapha's last annual accounts showing that it had posted a loss for the sixth year running, the one reported in November amounting to £12 million.

It has been reported that half a dozen customer service roles were cut at the US office in September, including the manager of the department. Rapha said its clubhouses will be unaffected by the redundancies and office closure.

In February 2023, the premium cycling clothing business underwent a refinancing operation to write off debt, the news coming as Rapha claimed it had "far outperformed" rivals in 2022.

Its figures for that year in question, up to 29 January 2023, showed that the brand posted a pre-tax loss of £12 million as it cited a downward trend in customer interest due to the cost of living crisis as well as overhead costs due to commitments made during the pandemic.

After tax the loss figure was £10.6 million, the sixth consecutive year the brand is in the red, however an independent auditor said that it had not identified "material concerns" that could cast any "significant doubt" over Rapha's future, at least for the next twelve months from when the financial documents were issued.

In a statement shared at the time, Rapha CEO Convercey said: "Our financial results highlight the impact of a turbulent few years and the ongoing challenges faced by the business, and the cycling industry as a whole. Despite a negative profit year, through strategic decision making around reducing overhead costs, leadership changes and doubling down on our mission to 'inspire the world to live life by bike', I'm confident in our ability to navigate the current economic climate and make the right decisions to see improved performance.

"During the recent period, Rapha witnessed a return of customer demand levels closer to the long-term average growth trend. This followed two exceptional periods driven by the COVID-19 pandemic and subsequent lockdowns, which significantly boosted the demand for sporting goods, including cycling apparel.

"However, concerns over the cost of living have started to impact consumer confidence in certain markets. Additionally, the market has become more competitive as competitors, both direct and indirect, strive to normalise their supply chains after the disruptions caused by the pandemic.

"Despite the challenges faced, Rapha has undoubtedly emerged stronger, retaining many customers who initially joined during the pandemic while also acquiring new ones. The company's revenue growth and customer base have remained resilient, holding up well against the record levels achieved during the height of the pandemic."

Rapha is far from the only cycling industry brand to be feeling the pinch post-Covid, the world's largest components manufacturer Shimano this week reporting a huge fall in sales for the first three months of 2024, down a quarter on the same period last year, when sales were also down 17 per cent on 2022 levels.

> The bike industry is "in chaos" says boss: so what do Trek's plans to 'right size' mean for the industry… and you?

Last month, Giant predicted continued short-term "challenge" for bike industry as it revealed profits were almost halved and sales were down 16 per cent last year.

The last few years have brought redundancies across the cycling industry, Zwift's co-CEO resigning in February as more job losses were felt at the virtual training app, following on from around 150 staff being let go in May 2022 before a further 80 jobs were cut last March, the second round of redundancies accounting for around 15 per cent of the workforce.

In January, Raleigh confirmed redundancies and restructuring as it announced it would be leaving its Nottingham headquarters, a "very difficult decision" made by parent company Accell.

Redundancies have also been made at Strava, Wahoo, British Cycling and other names and brands.