Scott Sports has obtained a loan of CHF 150 million (US$174 million), with the aim of improving its financial structure and balancing its considerable inventory. The financing was provided by the company’s main shareholder, Youngone Corporation, a South Korean clothing company.
The company in an official note disclosed: “Scott Sports plans to use this loan for the company’s working capital and will appoint a person designated by Youngone Corporation as financial controller to manage and supervise the overall process.”
Struggling bicycle industry
Cycling brands have been struggling for financial stability after the boom that occurred during the pandemic, in which product stock levels increased and demand decreased significantly, Cyclingweekly revealed.
In a previous statement, Scott marketing director Reto Aeschbacher said: “The cycling industry needs significant financing in times of high inventories. Youngone, as a shareholder, has now provided a short-term loan to Scott.”
Lapierre owner had cash injection
The Accell Group, the company that owns Lapierre, Raleigh and Haibike, had to rely on a recent cash injection of 250 million Euros from its parent company KKR to have “sufficient liquidity”.
Canyon and Giant also having problems
The British website Cycling Weekly revealed losses at the German brand Canyon and a drop in profits at Giant, the largest bicycle manufacturer in the world. Giant cited “large inventories” and “weak demand” from US and European markets as reasons for a drop in trade.
It’s unclear how urgent the liquidity challenge Scott faces is. According to the brand’s latest accounts, which only cover the year to October 2022, the manufacturer made a pre-tax profit of CHF56.8m (£52m).
