2pure had outstanding £900,000+ to creditors

Distributor 2pure went into administration earlier this year with £941,771 outstanding to creditors, including brands and retailers.

The administrators report lists 2pure’s unsecured creditors statement of affairs with sometimes significant sums against the likes of Nuun, Paceline, Moustache, Lizard Skins, Lanex A/S, Ibis cycles, Coros (which ended its distribution deal with 2pure in February), Compressport and Columbia Sportswear. The report said it is estimated there will not be sufficient funds available to “make a distribution” to unsecured creditors.

Assets at the distributor listed included stock worth £371,607.

2pure had 11 employees at the time it went under, making them all redundant on 18 May 2023. The firm had – by that point – cut headcount by 60%, including key personnel like MD George Bowie. Other cost saving measures saw 2pure trim its operations (cycle, run, outdoor and direct online sales) into one core cycling division, in January.

FRP was brought in to review the business in March 2023. Continued cashflow issues saw the business unable to pay its debts.

An AMA was not considered due to “liquidity pressure” and prospects for a going concern sale were limited due to the excess stock in the marketplace.

The administrator’s report has some brutal words to say, inadvertently, about the industry, by our interpretation at least. Noting that the company was “historically loss making”, the report went on to note that an upturn in profitability in FY2020 and FY2021 saw the company invest heavily into bolstering its inventory levels in the hope that this trend would continue into FY2022.

CI.N would caution, at this point, against wagging fingers at 2pure for those heavy investments in inventory. Multiple sources have confirmed to us, in the course of the past 12 months-plus, that – to some extent – importers hands were forced into making larger orders. Higher up the chain, material producers and suppliers were experiencing huge demand as the globe struggled to keep up with lockdown-related demand across multiple industries. With demand skyrocketing, materials suppliers were selling on their own terms and customers were buying in bulk to ensure they got any stock at all. That excess of materials led to forced demand further down the trend and – ultimately – more finished product in the supply chain. How that factor measures up versus optimistic sales projections in 2023 is probably something only a handful will ever know.

Perhaps more pertinently, when we’re over the latest bunch of crises, including the post-Covid overstock situation and inflation hitting businesses and consumers alike, the industry will have to deal with the longer term challenge of broadening its customer base. Pre-Covid, the industry was not booming (as this administrator’s report hints) and was – it has been argued – in decline. Many pundits point to a more viable future if the industry can bring in new customers, from a more diverse base.

The difficult post-Covid trading climate claimed fellow distributor Moore Large earlier this year, as well as Planet X (which was later snapped up) and ProBikeKit (which was later bought by Evans Cycles owner Frasers Group).