Business partners of Wiggle and Chain Reaction claim to have received an email, informing them that the company plans to file for insolvency. This news comes after a turbulent time for Wiggle Chain Reaction's parent company, Signa Sports United. Recently, Signa Sports United (SSU) announced their plans to restructure and delist from the New York Stock Exchange due to financial struggles, including significant shareholder and bank debt.
The recent news that Signa Holdings, an affiliate of SSU, has terminated its unconditional €150 million Equity Commitment to the company has caused turmoil for SSU and its subsidiaries. According to SSU, the decision was deemed "unjustified" and has put them in a difficult position, which has also had a ripple effect on Wiggle CRC. In an email to Wiggle CRC's business partners, it was stated that they are now facing insolvency and are forced to seek self-administration through court. This drastic outcome is a result of SSU's decision to restructure and delist from the stock exchange due to a decline in demand for their products in the first nine months of 2023.
In a recent statement published on its website, SSU acknowledged that while certain economic indicators in key markets have shown slight improvement, the demand for the company's products remains significantly lower than pre-pandemic levels. As a result, SSU has announced plans to evaluate its operating model, including potentially terminating underperforming assets, in order to improve the company's financial stability. In a move to strengthen its distressed liquidity position and financial profile, SSU recently completed the acquisition of Wiggle CRC, settling a total of £312.9 million in external debts.
SSU completed the acquisition of Wiggle CRC in December 2021. This coincided with SSU's launch on the market and marked the settlement of £312.9 million in external shareholder and bank debt for Wiggle CRC. According to Wiggle Limited's annual report for the fiscal year ending on September 30, 2022, the company reported a pre-tax loss of approximately £97 million. However, they still generated a revenue of over £252 million, with 38% of that coming from international markets outside of the UK. The company was able to benefit from lockdowns during the pandemic, particularly in 2020 and 2021. While there was a 32% decrease in sales compared to the previous year due to the loss of this benefit, they still saw a 7% increase compared to the year ending in September 2019.
In the same period, international sales decreased by 26%, as Wiggle CRC reported the negative effects of Brexit on sales to the EU. This was due to higher duty and fulfilment costs, resulting in higher pricing. The report also acknowledged the challenges posed by economic uncertainties, with Wiggle's chief finance officer Adrian Bruce stating that the impact of these uncertainties on the retail industry in recent months has been significant, and it is difficult to predict their future impact. However, Bruce has since left the company in May 2023.