It has been announced that billionaire Mike Ashley has bought the struggling bike chain Evans Cycles, with half of the bike shops set to close and hundreds of jobs at risk.
The chain of shops has its head office, warehousing and distribution centre in Gatwick, with its 62 shops dotted around the UK including one in Air Street, Brighton. It currently employs 1,300 staff.
The company was placed into administration and was being handled by PricewaterhouseCoopers before being sold to administrators.
Administrators then sold the whole business to Sports Direct International stating they were ‘delighted to have secured a future for the business and employees of Evans’.
“Evans is a long-standing, well known and trusted brand with nearly 100 years of heritage in the cycling market,” said joint administrator Matt Callaghan after selling the business.
“To have managed to preserve the business and transfer all staff to the purchaser is particularly pleasing.”
However a few hours later Sports Direct chief executive Mike Ashley announced he would be closing half the stores.
“We are pleased to have rescued the Evans Cycles brand,” Mr Ashley said. “However, in order to save the business we only believe we will be able to keep 50 per cent of stores open in the future. Unfortunately some stores will have to close.”
James Keany at commercial property firm CBRE, which is advising Sports Direct on Evan Cycles, 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.”
Why did Evans Cycles struggle?
Having been established in 1921, Evans Cycles has been described as a ‘leading independent specialist cycling retailer in the UK’s highly fragmented market’.
However according to joint administrator and PwC partner Matt Callaghan 2018 has been a ‘very difficult trading year for the business’, blaming the extended winter weather at the beginning of the year and a ‘lack of cash to invest in stores and develop the online platform’.
“A combination of losses, the capital expenditure requirements and tightening credit has led to a liquidity crunch,” he said.
Who is Mike Ashley?
He opened his first sport and ski shop in 1982, expanding and rebranding to become Sport Soccer before eventually becoming Sports Direct international Plc.
Over the years he has bought many brands with Evans Cycles the second retailer that the billionaire has rescued in as many months.
In August, Sports Direct paid £90m to buy House of Fraser shortly after the department store chain entered administration.