World News Briefs – Trek to Cut Staff and Product Range

Trek To Cut Product Range by 40% and Staff by 10%

In an internal memo to staff delivered in early March, Trek Bicycle President John Burke announced that he has decided to “right size” the company by 10% in response to slow sales and high inventory levels. But he says the company’s overall strategy remains unchanged.

He said in addition to a 10% cut in spending, Trek would substantially reduce its stock keeping units (SKUs), saying Trek’s model year 2026 SKUs will be 40% lower than model year 2024.

“These are turbulent times in our business,” he said. He went on to say the global bike market is “in chaos,” with high inventory levels at wholesale and retail levels, leading to “significant and continued” discounting. He said retail sales were also below Trek forecasts, including in January and February this year. He said the company had not hit its monthly sales goals for the past 15 months.

He said the situation left him with three options: simply hope for better days ahead, continue to make cuts around the edges, or “right size our business to the realities of the marketplace.” He said he decided to take the third route.

We have not yet heard what impact the announced cuts will have upon Trek Australia.

Most of this information is part of a longer article that was first published in Bicycle Retailer & Industry News (USA)

Torpedo 7 Sold for $1

Only recently we reported here about the bankruptcy of Wiggle Chain Reaction.

Now another name that in years gone by was often muttered alongside various curses by Australian bicycle dealers, has also fallen on hard times.

Torpedo 7 is a New Zealand based company that was well-known for aggressive price discounting via its online store throughout both New Zealand and Australia and also via a chain of brick and mortar stores in New Zealand.

Some years ago The Warehouse Group which is one of New Zealand’s largest retail chains, purchased Torpedo 7 and branded a network of ‘big box’ sporting goods stores under the Torpedo 7 brand. These included bicycles.

The Warehouse Group said that the sale for NZ$1 would result in a financial write down of between NZ$55 (A$50 million) and NZ$65 million (A$59 million).

The Warehouse initially paid NZ$33m (A$30 million) over a three year period for a 51 per cent stake in Torpedo 7 before acquiring an additional 29 per cent stake in March 2014 for NZ$15.2m (A$13.8 million). All up it invested NZ$52.2m (A$47.5 million) in the sporting goods firm.

Hamilton-based Torpedo7 was founded in 2004 by Luke Howard-Willis. In the year to July 2023, Torpedo7 made an operating loss of NZ$22.2m (A$20.2 million).

Torpedo 7 has been purchased by Tahua Partners which is an Auckland-based company that operates a diverse portfolio of retail and hospitality brands, including Starbucks, Hannah’s Shoes, Burger King and Number One shoes.