Wahoo Isn’t Going Bankrupt—and We’re Happy About That
Wahoo, maker of the Kickr smart trainers, Elemnt computers, and Speedplay pedals did well financially before 2020. Once the pandemic hit, the Tickr manufacturer experienced a boom, like much of the cycling industry and expanded to keep up with demand. As pandemic restrictions waned Wahoo experienced a supply whiplash, leaving it with a supply surplus and heavy debt.
Wahoo’s woes started in 2022 when the company missed debt payments. Credit ratings agencies S&P Global Ratings and Moody’s downgraded the company’s debt ratings because of the possibility of Wahoo defaulting on its debt payments.
“...persistently high inflation and the shift in consumer spending from goods to services will continue to pressure consumer demand for discretionary goods, including the company’s bike trainers and related products. Also, the high promotional activity in efforts to improve sell-through and reduce inventories alongside increased competition will continue to pressure profitability,” Moody’s stated about the situation, according to SGB Media.
Additionally, “the macroeconomic conditions in Europe, the company’s largest market, continue to deteriorate, given the ongoing geopolitical conflict and its impact on energy costs,” the statement continued.
Things looked bleak for Wahoo until this week, when the Atlanta-based company reported receiving an infusion of cash that allowed it to “fully recapitalise” according to Founder Chip Hawkins.
Investors provided “significant cash liquidity designed to extend the company’s prominence in advancing innovation in the global smart fitness and training category,” said Hawkins.
Wahoo pulls back from the brink
“The investment from both new and existing investors is a clear sign of confidence in the strength of Wahoo—specifically our team, brand, strategy, and powerful ecosystem of innovative products, software, and services,” said Wahoo CEO, Mike Saturnia according to Bike Biz.
Wahoo’s road to recovery comes after the company missed additional debt payments this March and debt ratings were again lowered in April.
Some might count Wahoo lucky considering it could have gone the way of indoor trainer competitor Saris. In 2022, Saris, facing circumstances similar to Wahoo, elected to “re-organize under Wisconsin's Chapter 128, a voluntary debt consolidation program run through the state’s circuit court system,” according to Bicycle Retailer.
“We have almost four times as much inventory as a year ago, primarily on our training product. Business was amazing in ’20 and ’21, then inventory filled up in all the channels everywhere, domestically and internationally on indoor training products,” said Saris founder Chris Fortune according to Bicycle Retailer.
Moving ahead, Saturnia acknowledged the challenge in turning the company around.
“This could not have happened without months of hard work and support from our channel partners. We want to thank our supply chain and retail and distribution partners for their trust and confidence as we navigated to a successful conclusion to this process,” Saturnia stated.
The last few years have been tumultuous for the bike industry, and the ripple effects—both positive and negative—of the pandemic bike boom will be playing out for some time. We’re happy to be able to report this good news, and that Wahoo will be sticking around.
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