Evans Cycles’ new owner Mike Ashley has decided to close half of its shops despite administrators advising that “almost all” of its stores make money.
Ashley, who snapped up the cycle chain last month for £8m in a pre-pack administration deal, said at the time of the acquisition that only half of its outlets would remain open “in order to save the business”.
The specialist retailer has a 62-strong store estate and 1,300 employees.
However, according to The Telegraph, Evans Cycles’ administrator PwC concluded in proposal documents that “almost all of the stores were profitable” and that the retailer was instead “burdened” with fixed costs at its head office.
At the time of falling into administration, Evans Cycles had £85m of debts, with its secured lenders HSBC and AIB as well as private equity firms owed £28m and £33m respectively.
Unsecured creditors are owed £24m by the retailer, but will likely receive only 2.5p for every £1 owed.
Ashley snapped up Evans Cycles a month after it was put up for market for new owners and a £10m cash injection.
The business reportedly received expressions of interest from private equity firms and retailers including JD Sports and Halfords, although the latter pulled out of rescue talks a week before Evans Cycles was acquired by Ashley.