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news
Evans Cycles, Manchester (CC BY 2.0 Smabs Sputzer:Flickr)Sports Direct buys Evans Cycles out of administration, will close half of its stores
Mike Ashley’s Sports Direct International plc has bought Evans Cycles after the chain went into administration today, but says that it will have to shut around half its 62 stores, with the potential loss of hundreds of jobs.
Last month, ECI Partners, the private equity owners of Evans – founded in south London in 1921 – gave bidders a week to produce offers for the struggling business, the UK’s largest bricks-and-mortar specialist bike retailer.
Although Halfords and JD Sports Fashion were also reported to be among those mulling an offer, in recent weeks it has become apparent that the only potentially viable offer would be from Sports Direct, which in September rescued the department store chain, House of Fraser.
Evans, in common with other retailers that principally trade on the High Street, has suffered from a combination of price competition from online operators, as well as rising overheads such as rent.
In a statement, Ashley, who besides a majority stake in Sports Direct also owns Newcastle United Football Club, said: "In order to save the business, we only believe we will be able to keep 50 per cent of stores open in the future."
Sports Direct is being advised by commercial property firm CBRE. The firm’s head of national agency, James Keany, said: “We are looking forward to working with landlords in order to help create a sustainable business.
"We will make contact with landlords over the next few days and discuss the future of individual stores."
In October last year, Sports Direct – already owner of the Muddy Fox mountain bike brand – made its first major move into high-end bike retailing with the acquisition of Tri UK, announcing plans to expand the Yeovil-based business to a further five stores.
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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23 comments
Was chatting with someone who owned restaurants and asked why so many big chains expand quickly and then 'fold'? His view was that their people who negotiate the rents are clueless and they end up paying way over the odds, which all adds up when you expand quickly. Wonder whether Evans have fallen foul of this, especially if Mike Ashley is starting with the rents? Wouldn't want to be a high street landlord right now.
Generally, debt and making foolish management errors, ie. forgetting to pay the VAT or NI bill, or just not having the systems and controls in place to match the pace of expansion eg Patisserie Valerie, Conviviality.
Cashflow of a shop or restaurant should be very good... everything you buy is on 30 day + terms, everything you sell is cash, or credit card.
Interest and rent bill has to be paid monthly regardless of revenues, and new premises take time to be profitable whilst fit out costs etc are absorbed. Too much of this too quickly and the outflows get too much to bear, especially if sales weaken a bit anyway.
Pressure from the PE shareholders. Gotta show a rising share price, which means growing and showing ever bigger and better forecasts. It doesn't really matter whether they're actually underpinned by anything meaningful. Then the PE guys just do their best to hang on and ride the share price until they think it's peaked, by which time the business is underwater in debts and has to be bailed out by whichever sucker they can persuade to buy it.
Just make sure that any orders are covered by credit card while the admin process is ongoing. I wouldn't trust mike ashley as far as I could kick the fat prick.
It's probably safe to assume that anything sold under brand names owned by Evans will be utter pish from now on.
I'm not sure how he does it either, Sports Direct basically devalued brands like Diesel and Firetrap. In year one they had a load of stock of the brands in their 'designer' fold which were at least decent quality. They sold them off cheap and then got in the 'inferior quality same brand' stock. It is now neither good quality, fashionable and often not even particularly cheap.
Lord only knows what they aim to do with cycling...
*hopes for Rapha end of season sale*
No wonder they are struggling - I went in to their largest London store in Mortimer Street the other day hoping to look at a range of winter tights (my current ones are so thin I feared my nether regions might make an appearance on the commute!).
They had two pairs in the entire shop and they were in sizes XL and XXL! They haven't a clue on what to stock or which market they are addressing. This is a store that used to have a really good range of Castelli, Gore etc. Now they seem hell bent on pushing all their own brand toot (Kalf anyone? FWE?) - have they really now worked out that cyclists are somewhat brand choosy? This is the real issue with Evans and indeed much of the the High Street.
And the idea that Ashley is going to save them! Watch the remaining Evans get filled with MuddyFox garbage and used in an attempt to re-position Karrimor/Lonsdale/Slazenger/Dunlop as cycling relevant brands.
I was in the House of Fraser in Richmond on Saturday and he has already displaced many of the brands you might go in to a department store to buy and replaced them with Firetrap, Karrimor, Lonsdale, etc etc - just what people go in to a House of Fraser to buy. Not!
Harrods of the High Street. He's having a laugh. More like an additional Pound Shop!!
I work for a company which deals with some of the HOF brands and his main issue is confidence in the brands because when he took over they owed around £400M to different partners
Yup, walk round the back of the Oxford Street store, you'll see empty glass cases where the high-end jewellry used to be on display. Many brands won't supply to HOF at the moment.
Shame about Evans. Once a decent family business, expanded too fast by venture capitalists. I was always annoyed that you'd look at the prices on line on the evans website and then go instore and see the same item at 50-100% more expensive. Ironcially you could do Click and collect and then get the same item discounted. Pointless.
SportsDirect actually sold off Dunlop-Slazenger last year to a japanese company, but expect to see Karrimor panniers and Lonsdale cycling/boxing gloves (its a war on the streets, don'cha know?) in an Evans near you soon*
* or not so near, if your local one is on the hit-list for closures.
Ironically, I've got a very old Karrimor saddlebag (must be 1960s era), the wide ones used by old school roadies. Karrimor was a great British outdoor brand before it was sold off and the name used to sell mass-produced footwear through Sports Direct stores. Would love to see Karrimor repositioned as a bike luggage and clothing manufacturer, much like Howies and Alpkit are doing.
I look forward to the unimaginative products piled high....oh wait....
If they die something else will appear. Pity they killed the independents themselves though.
I remember years ago in Leeds and york there were loads of independent video game shops and then electronics boutique appeared and hmv etc got in on them.
Smaller retailers are always fucked as they are last for stock distribution. Say, GTA 6 comes out. Could be a big earner ......but sainsburys gets all the stock.
We had one of those local petrol stations years ago but the guy shut because basically they couldn't be arsed to supply him.
Last time I went to Evans, the Bristol store, was when I needed a new inner brake cable. I was determind to buy Shimano but the assistant insisted they were overpriced and their own Flyte ones were just as good for less. They either have a higher mark up or there is no surprise they were in administration.
Always felt like over saturation with the number of stores in close proximity in central London. Cycle Surgery have had a similar retrenchment but their withdrawal obviously hasn't helped Evans fight the same problems. I've bought a fair bit of stuff from them over the years, but not sure I want to supportvMike Ashley going forward.
Horrible time for the staff, hope people find new gigs quickly.
Wow, that is pretty bad. I never realised Evans was in such trouble - though when I went into the Evans store in Bristol over summer it was fairly bare with very boring mostly low-end stuff in stock.
Evans have consistently great prices on Shimano parts though, I've bought two sets of Ultegra R8020 levers and brakes from them in the past year alone - and will continue to buy from them if their prices stay great!
They've managed to kill off pretty much every independent bike shop in this city, and I'm lost as to how, but I can see how they got into trouble.
Continental GP4000 at £40.00 on the web, £55.00 in store with no movement on price.
Fortunately they've taken on a few folks from the last lbs to close down, so not all bad.
As for taking on landlords, if Mike "The Bike" Ashley can take them on, why didn't Mary Portas when she was supposed to be saving the High St?
I think the difference is that Mary Portas was trying to fill buildings and didn’t have the leverage to convince landlords to make it attractive to tenants whereas Ashley can threaten landlords with a take it or leave it offer with most landlords not wanting to take the risk of ending up with empty property.
Mary Portas had influence to change, but she was just a name amongst others as an example.
Take it further than her and include House of Fraser/Debenhams/Poundworld/ToyRUs/Maplin/Multi York/Greenwoods/And I could go on, but I won't.
The point being that Mike "Golden Balls" Ashley hasn't always been a big entity, now he is. What did he do differently and why didn't others? And I think you've demonstrated the attitude to fail quite well too.
He's got a stake in Debenhams too. To be fair he's lost money on that so far
Where's he getting his money from? The High Street is fucked, everything is closing, but Mike "the Midas Touch" Ashley is making a fortune.
I think it might be about gaining power over landlords - if he can start doing group-wide lease deals. It's a long game but then property always is.
So, he's basically just buying "the entire f-ing high street"?