“
The withdrawal paves the way for another investor to take control of the struggling chain, with JD Sports and Sports Direct reportedly showing interest.
“
http://www.bikebiz.com/.amp/business/halfords-withdraws-from-evans-race
CityCyclingEdinburgh Forum » Cycling News
The future of Evans?
(56 posts)-
Posted 6 years ago #
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This could be a shrewd move to tap into the emerging trend I've noticed, predominantly among younger cyclists, for wearing branded hooded tracksuits and trainers while cycling high end road and mountain bikes about the streets.
Posted 6 years ago # -
There is some talk of Halfrauds stocking Bromptons. Perhaps Brompton think Evans is on the skids.
OOoops. Read the article.
Posted 6 years ago # -
Bromptons in the Cycle Republic stores which are exclusively bike shops.
Scrolled to bottom, Halfords hiring executives from Evans and Chain Reaction
Posted 6 years ago # -
Hmmm. Another line of shop to be avoided, then. I finally picked up my warranty-swapped brakes today so need not return.
Posted 6 years ago # -
Oh yuck. Poor staff.
Posted 6 years ago # -
From the Beeb article:
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Active Private Equity bought a controlling stake in the company for about £35m in 2008In 2015 Evans was sold to private equity firm ECI Partners in a deal valuing it at about £75m
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Whatever you think about Mike Ashley, these private equity firms are culpable in the company's slide into administration.
Posted 6 years ago # -
I was going to comment on the private equity purchases. I doubt they did badly out of any of it.
Posted 6 years ago # -
Related
https://www.bikebiz.com/business/sports-direct-tycoon-mike-ashley-puts-big-money-into-bike-retail
Posted 6 years ago # -
“I doubt they did badly out of any of it.”
Maybe, maybe not.
I presume they didn’t get all their original stake back.
If they managed to get excessive revenues over the last three years that will be a significant cause of the problem.
Posted 6 years ago # -
Ashley has a very bad track record.
Posted 6 years ago # -
argh!
Posted 6 years ago # -
argh
You too eh!
Posted 6 years ago # -
491 million views, Zowie!!
Posted 6 years ago # -
At least it's not covered in ads anymore.
Posted 6 years ago # -
"If they managed to get excessive revenues over the last three years that will be a significant cause of the problem."
Well that's one of the issues when a company is privately owned: not always clear whether or not a company is being invested in or squeezed dry.
Posted 6 years ago # -
The other option is that they were investing heavily in the wrong place.
With the huge number of electric bikes they've brought in recently to all their stores it wouldn't surprise me if that put them into a deficit position. It's possible they bet badly on EB (bit too early maybe?) and didn't have cash reserves (see above excessive revenue generation and dividend payouts) to support themselves when sales were not quite what they should have been.
Posted 6 years ago # -
“With the huge number of electric bikes they've brought in recently to all their stores it wouldn't surprise me if that put them into a deficit position.“
Quite possibly, though to some extent it will depend whether they have been paid for.
They certainly have some very expensive ones on offer, presumably not all sitting in all branches.
“Best selling” doesn’t mean they have sold lots.
Posted 6 years ago # -
I've had the impression that Evans has expanded fairly rapidly in the past few years (although that may just be my perspective from being aware of the new stores in Fountainbridge and near Buchanan Street in Glasgow). In which case, is this just a traditional case of over-capitalisation, probably driven by the venture capitalists' requirement for constant growth?
Posted 6 years ago # -
Re electric, one of the industry podcasts I listen to, is often of the opinion that electric bikes are the only thing keeping the industry alive at the moment, well that and bike rental schemes.
Also one of the huge problems for the industry is that although it is high volume, it's never been high profit and therefor often when when investment groups get involved they don't get the returns they seek, and so bin perfectly viable businesses making low % profits, or ruin them trying to make them provide higher returns.
Posted 6 years ago # -
"bin perfectly viable businesses making low % profits, or ruin them trying to make them provide higher returns."
Former seems unlikely, I suspect moreso the latter.
Posted 6 years ago # -
"The EU has imposed tariffs on imports of Chinese electric bicycles, in an effort to shield the bloc’s manufacturers against dumping at a time of rising trade tensions around the globe.
Brussels decided to impose provisional anti-dumping duties of between 21.8 per cent and 83.6 per cent on inbound shipments of e-bikes from China, without which it said a further deterioration of the industry’s economic and financial situation was “very likely”.
I wonder if the EU tariffs on electric bicycles had an impact appears to be higher than trumps electric bicycle tariff
Posted 6 years ago # -
from another forum someone posted.
Evans’ biggest creditor is also its owner, the private equity company ECI Partners. When ECI bought Evans they transferred £52m of the £80.4m purchase price immediately back to Evans and charged 12% interest on that “loan”
They would be making money apart from that...Posted 6 years ago # -
So ECI Partners are to blame for the company going into administration it would seem. 12% interest at current UK interest rates is pretty steep. Also saddling the company with that debt is pretty ruthless and sharp practice. Almost as though they wanted the company to fail...
Posted 6 years ago # -
Also saddling the company with that debt is pretty ruthless and sharp practice.
It’s pretty common practice in the world of private equity as I understand it. All very “clever” until it goes wrong (as it often does).
Posted 6 years ago # -
Posted 6 years ago # -
I suspect the interest rate has a lot to do with tax avoidance. Dividends are taxable while interest payments aren't.
Posted 6 years ago # -
Assuming interest payments of around £6 million per annum, the private equity firm (or rather their investors) lost money on the purchase. I notice there is no mention of Evans on the ECI web site, nor in the profiles of their 'consumer' sector investment team. They must be hoping this all goes away quietly and doesn't turn into a disaster for which they take the blame.
Posted 6 years ago # -
It’s the nature of private equity that they try to make much money as possible as fast as possible then (usually) sell on to someone else who tries to keep doing it.
Firms know they are gambling and it doesn’t always work out.
Meanwhile lives and businesses get messed up.
Similar activities were once known as known as asset stripping and called “the unacceptable face of capitalism” - coined by a Conservative PM.
Then revisited by another.
Much wringing of hands. Little changes. Now generally more accepted than in the past.
Posted 6 years ago #
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