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news
Evans Cycles, Manchester, licensed on Flickr under CC BY 2.0 by Smabs SputzerMike Ashley's Sports Direct in market for £100m Evans Cycles sale?
Newcastle United and Sports Direct owner Mike Ashley is reported to be among potential purchasers of the UK’s largest specialist bicycle retail chain, Evans Cycles.
Last month, it was reported that Active Capital, the private equity firm that bought the retailer in 2008 in a deal worth £35 million, was exploring a potential sale of the business.
According to Telegraph.co.uk, online retailer Wiggle, also under private equity ownership, is interested in acquiring Evans too, as are other investment firms.
But the newspaper says that Halfords, which sells more bicycles than anyone else in the UK, has “categorically ruled out” bidding for the business founded in South London in 1921 which now has more than 50 branches.
Active Capital, which also owns the fast casual dining chain Leon, is said to have appointed the Canada-based firm Canaccord Genuity to handle any potential sale.
The Telegraph says that Sports Direct wants to expand into cycling, but adds that a potential stumbling block to any deal is whether brands such as Specialized and Trek would continue to supply Evans should it be bought by the retailer.
Founded in Maidenhead, Berkshire in 1982 as Mike Ashley Sports, from the late 1990s on the business now known as Sports Direct has made a string of acquisitions of sports brands.
In 2002, it acquired London-based sports retailer Lillywhites, including its Piccadilly Circus flagship store, and in 2004 it bought Dunlop Slazenger.
Ashley floated part of the business on the London Stock Exchange in 2007, but remains its majority shareholder.
Simon joined road.cc as news editor in 2009 and is now the site’s community editor, acting as a link between the team producing the content and our readers. A law and languages graduate, published translator and former retail analyst, he has reported on issues as diverse as cycling-related court cases, anti-doping investigations, the latest developments in the bike industry and the sport’s biggest races. Now back in London full-time after 15 years living in Oxford and Cambridge, he loves cycling along the Thames but misses having his former riding buddy, Elodie the miniature schnauzer, in the basket in front of him.
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51 comments
Been sold to another private equity company for £100M
http://www.bbc.co.uk/news/business-32554887
Oh dear God no. As well as Lillywhites have a look at what he did to Field & Trek. Used to be a top quality outdoor equipment shop.
'It mustn't be forgotten that behind the 'jolly fat Cock' image, Ashley's a smart guy. '
FTFY
I'm not outing Ashley as some superstar, far from it, i'm a toon fan after all. What I'm trying to get across is that just because its SD trying, or allegedly trying, to buy Evans it doesn't mean that its going to turn into a crap shop. With greater buying power he might, for instance, be able to bring the likes of carbon wheels into the price band of mere mortals or drop the price of Shimano groupsets by over £100.
Its the over-inflated prices that annoy me about cycling, look at Rapha, decent quality but a really stupid price, as are Specialised etc etc. One of the Ribble frames is used by another supplier but they add another grand to the price. The list is endless. If Ashley and SD can break the chain of ever increasing prices it can only help.
One of my mates runs a LBS and he can get a brand new Focus carbon road bike with Ultegra groupset for 45% of the retail price.
At least you'd know one thing - no chance of him expanding into Europe.
It's not just about making stuff cheaper though. If you go in to Sports Direct, most stuff is cheap and crap. If suppliers are having their margins squeezed they will reduce their costs too.
Examples: No Fear, Ocean Pacific, Airwalk - All brands that used to be good quality street/skate wear, now they are nasty cheap products. Even T-shirts from Adidas or Nike in SD seem to be cheaper material than normal priced gear from other outlets.
So Rapha either won't supply an SD owned Evans or they will produce a budget range, my money would be on the former option though as they don't seem likely to devalue their image.
Do you want £100 off a Shimano groupset if it means that Shimano will use slightly worse quality materials? Why not just go down a level in their current range?
And don't get annoyed about over inflated prices, just don't buy it. There are plenty of decent value ranges available, I particularly like Northwave at the moment for quality/price balance.
Are you seriously suggesting that Shimano will make a cheaper/nastier version of Ultegra just for SD, and retain the premium quality version for other outlets? They will continue to make one Ultegra, which will be the same whether you buy from LBS, SD, Wiggle, CRC, or wherever.
That isn't what I was suggesting, but it I suppose it could happen.
What I was suggesting is that if retailers squeeze the margins of the manufacturers they in turn will reduce their manufacturing costs to maintain their margin. That could affect the quality of the products.
Beware: long post ahead. This is not investment advice.
People talk about buying power - but there's very little crossover between general athletics footwear/apparel/equipment and cycling-specific. (I know Adidas do a few lines, Nike and Under Armour do baselayers, but apart from that...?). So I'm not sure how he would be able to convince existing cycling brands to give him special discounts as he has with Nike, for instance.
How he has succeeded so far is by taking an existing brand with a positive image, and extending it into new markets. Take Dunlop or Karrimor most notably - started out making equipment for one or two specific sports: golf, tennis, hiking. But Ashley realised that people would buy a product with a brand they recognised on it, even if that brand had no history at all in that product. That's why you can buy a Dunlop-branded mountain bike (but please don't).
He also goes in for vertical integration: that is, he owns the production, the brand on the product, and the shop that sells the product. All the Karrimor gear is now made in China in a factory owned by Sports Direct International - so when you buy a pair of walking boots Ashley's not paying anyone else any licence fees for their brand or margin on their production costs.
It mustn't be forgotten that behind the 'jolly fat Cockney' image, Ashley's a smart guy. So does he think he can make money by squeezing his supplier costs? Probably not. Extending and/or reanimating an old brand that he already owns, or could pick up cheaply? Well, he owns MuddyFox, Carlton (albeit the racquet company) and No Fear. Evans have the Pinnacle range already which could be rebranded to MuddyFox (MTBs at least) and there are no shortage of OEM frames out there that could sit in an 'Evans' shop as a volume base model range (as Halfords has Trax and Apollo).
So there's sense to it. Will it happen...?
I have been an exponent of many sports over the years, running, football, hiking and climbing and now, due to dodgy joints, cycling. I have seen the erosion on the high street and elsewhere of outlets that sell quality sports brands and can profer expert advice, and I can contribute much of that directly and indirectly to Sports Direct.
A great example is what SD typically do to the brands they buy. Karrimoor was once a great outdoor clothing, footwear and equipment brand. Slowly but surely it became a byword for cheap crappy stuff that I would now be embarassed to wear and it certainly doesn't have the functionality it used to.
You are hard pressed to find quality anywhere in SD, despite having so called quality brands in there. The rise of the casual wearing and sportswearing public has driven prices and quality down because they are only after the brand and not the functionality. You can't argue against Mike Ashley's business savvy, but it has meant that the high street sport shop I remember from my youth has either disappeared or has to follow the same model as SD but without the buying leverage.
If he gets his teeth into cycling, I can only see one result - cost down initially, forcing competition to follow suit, with an inevitable slide in standards and casualties aplenty. Once the competition is reduced, quality will go down in the so called premium brands that SD will stock.
I think the very top end market in cycling will be fine, SD and a few others will have the bottom end, but I fear for the middle range of the market.
If Wiggle did end up buying Evans and keep the retail locations open, would this be the end of the LBS? Their buying power is already huge and would only increase if they had numerous locations dotted around the country. Good for us as consumers no doubt but perhaps not so much for the smaller independent places?
stumps, you might like to bear in mind that Sports Direct have been outed for their zero hours contracts and have a seriously sh*t reputation as an employer.
I completely understand the desire to pay no more than necessary for a product but sometimes paying the extra may have other benefits. Many small shops support local sport and give talented riders a leg-up. The owners certainly don't get rich by selling bikes.
Paying RRP isn't necessarily a sign of being ripped off, and plenty of shops do discounts or deals. It sounds like you would prefer Mike Ashley to be a tax-avoiding billionaire and hiring people who can only afford a scary BSO on their crap wages instead of there being a network of smaller shops, each making a living and putting money back into the local economy. I know which I'd prefer to work for!
Standard pricing markup for a Specialized Tarmac 105-spec bike in Evans is 46%. They can afford their discounts (but you will be amazed how many people don't pricematch or ask for discounts)
Are the Evans 'Ride-It' events part of the sale or are they run by a separate enterprise?
Don't understand the negativity towards Sports Direct ? It seems to me that they give good value for money.
you've obviously never been in sports direct - most frustrating shopping experience i've ever had.
You've obviously never been in to Lillywhites in Piccadilly! That place used to be the ultimate for any sports enthusiast, now it is a complete crap hole. I used to love perusing the shop for hours, now I get in and get out if I need something in a hurry when I'm in town.
It genuinely upsets me how they have ruined the place.
Quick, someone tell Cadel. Too good an opportunity to miss, no rebranding required, etc, etc....
In fairness, Mike Ashley also owns Flannels (or it could be cruise) and has retained contracts with big name brands.
I can't see him wanting to replace Specialized, Trek and Cannondale with Slazenger or Donnay own brand bikes but he will probably take sale stock out of stores and ship it into sports direct with big price reductions.
The problem with any bike shop in the UK is the internet. For everyone standing up and saying they don't want Mike Ashley, there are another 15 buying from the 'net even when there is a local bike shop.
Cyclists have always been parsimonious; one of my friends ran a bike shop and told many tales of top of the range bike owners arguing over 10p on an inner tube. Never mind the try it on in store, order it on the 'net types.
If you don't support bike shops, they will fall to the Mike Ashleys or disappear altogether.
I really struggle with this. I have a really good lbs run buy three really nice guys. They offer a great service, help me to maintain all of my bikes and they have even lent me the odd tool when I didn't have something that I needed to do a job myself.
I buy small things from them such a lube for my road bike, some Stan's fluid for a mountain bike and sometimes I just buy random things like back-up lights when they have done me a favour.
But when I broke a rear mech on a mtb last weekend, I have the choice of paying RRP (£69'ish) at the lbs or £44 on Wiggle. I can't afford to just pay £25 extra to help support the lbs. Even if they discounted it by 10%, which they probably would, I'd still be out of pocket to the tune of £18.
You make it sound like the onus is on us to do some kind of favour to the LBS. I'd have thought it's more the LBS needs to find ways to attract and keep customers. I don't think it's just cyclists who seek the best deals!
'Just because its Mike Ashley dont give it a miss you could be much better off. '
No thanks. Morals are more important than a few quid.
I dont understand that. What difference is there from buying from Ashley to buying from say Wiggle ? Virtually all the kit is made in the same sweat box in the far east and rebranded by unscrupulous companies as though its something special.
Where i live there is a Sports Direct then 2 shops away there is a JD Sports. I can buy a pair of Nike Air trainers for virtually £30 cheaper at Sports Direct. Made in the same place by the same under paid staff but bought in bulk by Ashley so its cheaper for us.
Its right to have morals but by buying the more expensive item your only helping that company get richer, not the person who made it.
My problem is with Ashley, not which place in the far east they are made. Ashley is, as far as I am aware, nothing to do with either Wiggle or my lbs, so I will continue to use them.
Well if I got an extra large Evans Cyles mug free with each order I'd be happy. The sports direct one is a bit chavtastic to take into work...
opps duplicate post
Ashley has been extremely smart with Sports Direct - buying up failing brands and having them manufactured in cost-effective factories, then cutting out the middleman by selling through his own stores (420 in total).
http://www.sportsdirectplc.com/our-brands.aspx
Sports Direct did extremely well during the recession by offering customers heavily discounted, branded goods whilst protecting his margin - he is Nike's largest global customer with many lines of OE shoes made to price points using previous season technology.
If you've followed the business model of Sports Direct you will see the generous bonuses / shares awarded to store management teams and long serving permanent staff, with the bulk of staff on minimum wages, zero hour or temporary contracts and no share of the bonus pool.
Welcome to David Cameron's UK PLC, where 'employment' is thriving!
yes that model works for Ashley for cheap sports wear but does it work for cycling when lets face there are few cheap competitors out there for Trek, Garmin etc ?
In fact Decathlon surely offers that service and is good.
And has a fraction of the coverage.
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