The CEO of Brompton Bicycle anticipates continued turbulence for the cycling industry into 2025, following a significant profit decrease of over 99% for the British folding bike manufacturer. This downturn is attributed to aggressive discounting by competitors amidst a saturated market.
Brompton’s profits plummeted from £10.7 million to a mere £4,602 in the fiscal year ending March 2024. This figure is less than the retail price of their top-tier T Line Explore model, highlighting the impact of consumers seeking more affordable options due to the rising cost of living.
Sales for the Greenford, Middlesex-based company, known for its folding Brompton Bikes with entry-level models priced near £1,000, experienced a 5.3% decrease, totaling £122.6 million. This decline in revenue corresponds with an 8.2% reduction in bike sales volume, as detailed in recent filings with Companies House.
Will Butler-Adams, Brompton’s managing director, pinpointed the primary cause of this profit slump to lower-than-anticipated sales volumes. He described the current state of the global bicycle market as “a really sad state of affairs.” The industry is currently grappling with substantial overstock, a consequence of overly optimistic demand forecasts made during the coronavirus pandemic surge.
“The industry is still in turmoil and will not get better this year. It will not be as bad as 2024 but there is still excess stock,” Butler-Adams stated, indicating that the challenges for Brompton bikes and the broader sector are not yet resolved.
Globally, but particularly in the US and European markets, bike businesses are struggling with diminished sales and widespread discounting. This situation arises from a Covid-era boom that spurred excessive production, leading to overflowing inventories in warehouses and retail spaces.
The past two years have witnessed the collapse of several bicycle brands and retailers, including online giants Wiggle and i-ride.co.uk, along with British manufacturers Mercian, Orange Mountain Bikes, and P Bairstow. These failures underscore the severity of the downturn affecting even established names within the Brompton bikes’ competitive landscape.
Butler-Adams noted that Brompton bikes have been directly affected by extensive discounting from distressed companies aiming to liquidate stock, especially in Europe and the US. The sector also faces increased competition from electric bike rental services like Lime, the growth of more budget-friendly Chinese brands, and emerging British startups such as Gocycle.
He further commented on the “decimated” retail environment for bike sales in the UK, marked by closures of independent chains like Cycle Republic and Cycle Surgery. Even larger entities, such as Evans Cycles, have scaled down their operations, signaling a significant shift in how consumers purchase Brompton bikes and other cycles.
In response to these pressures, Brompton has deferred its plans to relocate to a new headquarters in Ashford, Kent, and suspended dividend payouts to shareholders after a previous £1.2 million distribution. In early 2024, the company secured £16 million from BGF, a fund supported by major banks like Barclays, HSBC, and Lloyds. This investment, in exchange for an 8.5% stake in Brompton, was utilized to settle debts, alongside approximately £3 million from existing shareholders including Butler-Adams and founder Andrew Ritchie.
Despite these industry-wide difficulties, Butler-Adams believes Brompton bikes are somewhat insulated due to their “more utilitarian” nature, appealing to commuters. He maintains a positive long-term outlook for the industry, citing increasing global governmental recognition of cycling’s benefits for public health and environmental sustainability. Cities worldwide, including London, Manchester, Paris, Shenzhen, New York, and Vancouver, are investing in infrastructure to promote cycling.
“London, Edinburgh, New York, Seville, Paris all have the momentum of getting people more active for air quality and trying to get people fitter. In the macro picture things are going in the right direction. The industry shot itself in the foot but that will roll out,” Butler-Adams explained.
He expressed optimism about the launch of Brompton’s more robust G Line model, particularly the electric version, suggesting “opportunities on the other side” for bike businesses resilient enough to invest during this challenging period. This indicates a forward-looking strategy for Brompton bikes to capitalize on future market recovery and evolving consumer preferences.
