Having been bought out just over a year back by the an investment firm created by two of Walmarts’ Billionaire partners, Rapha has this week begun a cost cutting drive that will result in job cuts.
Speaking to the Daily Telegraph, a former employee said that between 60 and 70 staff have been let go with immediate effect. A further insider said the figure may be higher still, while the company itself told the paper the figure was much lower at around 15 staff. The cuts follow the exit of CFO Emilio Foa.
A redundancy programme is said to have been driven by a need to reduce costs and strengthen the brand’s position for long-term profitability.
Notably, when the buyout took place many were quick to point out Rapha’s low profitability in contrast to the £200 million paid for the high-end cycling apparel, cafe and holidays business. At the time of the purchase, Rapha’s profit sat at around £1.4 million, a figure many thought would be higher.
Turnover rose from £48.8 million to £67.1 million in the year to January 2017.
The venture capital owners Steuart and Tom Walton, the grandsons of the supermarket founder, bought the business through their RZC Investments business. At the time a bidding war was believed to have taken place against the likes of LVMH, which forged ties with Pinarello at the end of 2016. As revealed by CI.N, Pinarello has now similarly altered its market approach.
Traditionally a brand that has avoided sales, Rapha has unusually differed its strategy over summer, offering a number of heavier than normal discounts, as well as appearing for sale on new channels such as Sportpursuit.
The brand has over the years aligned itself with the upper echelons of cycle sport, inking a deal to provide Team Sky’s clothing in 2013.
An interview carried by CI.N in March of 2017 revealed that the business had, for the first time, turned over £1 million in a year on holiday trade.