Ratings agency downgrades Wahoo, warning company’s finances are “unsustainable”

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Ratings agency downgrades Wahoo, warning company’s finances are “unsustainable” S&P Global Ratings says smart trainer brand may default on debt in coming months cycling

credit rating, warning that it believes that unless the company can raise further funding or restructure its debt, its finances as they currently stand are “unsustainable.”

The company, which besides its Kickr range of smart trainers and bikes also sells products including the Elemnt Bolt range of bike computers and smartwatches, and in 2019 bought pedal brand Speedplay and indoor training platform The Sufferfest – subsequently rebranded Wahoo Systm – was among those that were boosted during 2020 and 2021 as lockdowns around the world saw many cyclists switch indoors for their training.

“The company’s sales during the third quarter of fiscal year 2022 declined by 56 per cent year over year, and we estimate they fell by an additional 35 per cent in the fourth quarter of 2022,” the ratings agency continued. The ratings agency, which expects Wahoo’s EBITDA for 2022 to be negative, said it did not expect that the company would be able “to significantly improve its profitability and cash flow amid the weakening macroeconomic environment, reduced consumer discretionary spending, and ongoing shift in consumer spending toward other categories.

“However, throughout 2022, the sports technology category – like many others, has been adversely affected by the impacts of Covid and the global economic downturn. Just yesterday, world cycling’s governing body, the UCI, announced Wahoo as the official smart trainer partner of this year’s UCI Cycling Esports World Championships, to be held on Saturday 18 February, with more than 100 women and 100 men expected to participate, each using Wahoo’s latest Kickr smart trainer, which we reviewed here on road.cc last month.

 

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