Price slashing sees Canyon make losses
Profits are down for the German bike brand, despite an increase in sales volume
Bike manufacturer Canyon has seen its profits fall into the red, with heavy discounting and supply shortages cited as a cause.
Canyon recorded a net loss of £1.7million (€2m, $2.2m) in the first nine months of 2023, according to the latest financial report published by its key stakeholder, GBL.
This is down from a net profit of £25million (€29m, $31.7m) in the same period in 2022.
In the report, GBL identified “higher discounts on certain bike categories” and “a supply shortage of high-demand bikes” as major drivers for the brand’s loss.
In a statement shared with Cycling Weekly, Canyon CEO Nicholas De Ros Wallace said: “We saw most companies in the bicycle industry responding to inventory challenges with large discount campaigns in 2023.
“When we also decided to do so, it not only led to increased sales, but also inspired new and existing customers to interact and engage with Canyon, and ultimately to enlarging the cycling community.”
Price slashing, despite negatively impacting profits, led to a growth in Canyon’s sales volume, which increased by 23% year-on-year in quarter three.
This bucks a trend of plummeting sales volumes across the industry, with a new historic low recorded in the UK.
“This performance is remarkable given the challenging and promotional market across categories and geographies and underscores the continued solid demand for Canyon premium bicycles,” De Ros Wallace said.
A press spokesperson at Canyon outlined that the company's EBITDA (earnings before interest, taxes, depreciation and amortization) is still in the green.
In January this year, Canyon reduced the prices across its range by up to £400 for UK customers.
The brand then suffered a shortage of road and gravel bikes in the third quarter of 2023, due to production challenges with one of its suppliers.
According to the company CEO, the “inventory and supply chain situation” has since improved.
“For 2024 our expectation is that it will still be a challenging environment for the bike industry,” De Ros Wallace said. “With our ambitious plans, based on performance, innovation and doing our best for the customer, we expect Canyon to continue on its growth trajectory.”
Canyon's losses also stem in part from the company making a number of investments in 2023, including opening a new headquarters in Koblenz, Germany, launching new local services and expanding its workforce.
The brand's profitability challenges come at a turbulent time for the cycling industry following the Covid boom.
Giant posted a 49% fall in pre-tax profits last month, citing high inventories and weak demand in the US and Europe.
Earlier this year, three major distributors collapsed in Moore Large, 2Pure and FLi. Online retailer Wiggle Chain Reaction Cycles then entered administration at the end of October.
Thank you for reading 20 articles this month* Join now for unlimited access
Enjoy your first month for just £1 / $1 / €1
*Read 5 free articles per month without a subscription
Join now for unlimited access
Try first month for just £1 / $1 / €1
Get The Leadout Newsletter
The latest race content, interviews, features, reviews and expert buying guides, direct to your inbox!
Tom joined Cycling Weekly as a news and features writer in the summer of 2022, having previously contributed as a freelancer. He is the host of The TT Podcast, which covers both the men's and women's pelotons and has featured a number of prominent British riders.
An enthusiastic cyclist himself, Tom likes it most when the road goes uphill and actively seeks out double-figure gradients on his rides.
He's also fluent in French and Spanish and holds a master's degree in International Journalism.
-
Jenny Graham Q&A: ‘I’ve stayed in more public toilets than I care to admit’
The Scottish ultra-endurance cyclist talks about bikepacking, hiding from bears in Alaska, and writing a book
By Tom Davidson Published
-
Are these the future of carbon wheels? Forge+Bond’s 25GR recyclable carbon gravel wheelset reviewed
We ride tested Forge+Bond's thermoplastic wheels.
By Anne-Marije Rook Published
-
Bike sales hit new historic low as cost of living crisis bites
Current sales volume below 20-year nadir, indicates Bicycle Association
By Tom Davidson Published
-
Exclusive: More jobs axed at struggling WiggleCRC
Nine people lost their jobs on Thursday, bringing the total to 114 redundancies since the retailer entered administration
By Tom Davidson Published
-
WiggleCRC closes international shops to 'solely focus' on the UK as it searches for buyer
Administrators cite economic impact of Brexit as retailer cuts trade overseas
By Tom Davidson Published
-
Cycling industry 'most turbulent it's been for 30 years' as major UK chain posts £1.6m loss
Balfe's Bikes director Mike Rice says sales are now up, after a tough financial period
By Tom Davidson Published
-
Giant profits fall 49% with 'weak demand' in US and Europe
Taiwanese bike manufacturer notes sales downturn in entry and mid-level products
By Tom Davidson Published
-
WiggleCRC sister company enters administration
French retailer Probikeshop becomes the latest of Signa Sports United's portfolio to fall
By Tom Davidson Published
-
Sigma Sports offers up to 50% off bikes citing ‘stock excess’
Retailer's new outlet sale comes amid widespread overstocking issues in the industry
By Tom Davidson Published
-
Wiggle could face unfair dismissal claims from laid-off staff, say experts
Sources say employees were made redundant without a consultation process
By Tom Davidson Published