Recovery Of Dutch Brand ‘Fietsenwinkel.nl’ Started In 2018

Amsterdam – Recently International Bike Group (IBG) has deposed its numbers at the Dutch Chamber of Commerce. While Fietsenwinkel.nl is still not making profit, the results show an increase. With the new strategy effective in 2019, there should be light at the end of the tunnel.

Exclusive Report.

For the context: Fietsenwinkel.nl has recently been one of the fastest growing online bicycle stores in the Netherlands and opened 50 stores in the past few years. The net-result of financial year 2018 ended on € 11.6 million in red in 2017. An improvement in comparison with last year: € 16.7 million in 2017. Its equity at the end of 2018 was € 9 million in comparison to € 31.000,- in 2017. According to CEO Day Louwers ‘’ÍBG has won support and faith by her shareholders in the strategic choices that have been made. With its equity at the end of 2018 and its support of her shareholders IBG has got a solid base under her investment plans.’’ In the Board’s report he writes that for IBG the change of direction came in financial year 2018. After years of growth Fietsenwinkel.nl is putting its scale size on the fast growing e-bike market with a completely new service organizations, aimed at the commuter.

Gross Margin Has Risen  

Louwers states that ‘’the big increase of the total market share of e-bikes and further growth in the electric segment contributed to an increase of the contribution margin per bicycle. Besides that we choose for a high service level as a standard for all bicycles IBG delivers to her customers. This high level did not make segment’s the bottom profitable. This lead to the decision to cut out this not profitable segment (mostly within city bikes).’’ This resulted in a decrease of revenue with € 20 million to €49 million. However, by changing the focus, the gross profit has increased with 25.1% compared to 17.9% in 2017. The increase of margin is reflected in the doubling of the contribution margin per bicycle, more than a doubling of the contribution margin per store and an increase of the contribution margin per employee with almost two times as much.

Outside The Netherlands                   

IBG did not only focus on the Netherlands. They gained a position in Belgium, and in Denmark under the name HelloRider. The Omni Channel concept is the same as in the Netherlands, but the market structure and the product range – which differ in every country – demand a different approach. Louwers states that ‘’in both Belgium and Denmark a market leadership in within reach. In Belgium the competition consists mostly of specialist trade, whereas in Denmark HelloRider is competing with other channels than the specialist trade. With our client orientation, supported by the new service concept, we expect that in a short period of time market leadership is a serious option in both countries.’’

Change Of Moral

Louwers recognizes in the board’s report that 2018 was a moving year for IBG employees. ‘’The backlog in after-sales service this summer and the negative attention it brought us, gave us a change in moral. But our flexibility appeared strong. We thank our employees for the fact that we have been able to make such a radical turn and are now in an advanced stage of the strategy’s implementation.’’ One of the biggest uncertainties for IBG, which goes hand in hand with the identified risks, is the recruiting and the process of employees. To control that, an internal department for recruiting and selection has been set up to streamline recruiting. To increase the focus on after sales-service, IBG has taken part of Fiets Service Punt (Bike Service Point) in 2018. With this it has become possible to quickly have sufficient capacity to service bikes in IBG stores.

Sensitivities

In the context of goodwill IBG has made a mandatory impairment calculation. Louwers says that ‘’this has shown that there is sufficient and positive space to avoid impairment. In case business is deteriorating with regard to the projections, then it’s not excluded that acquisition is debited on goodwill.’’ (bank)financings are there to re-enforce IBG’s growth. In Louwers’ opinion the business plan of 2019 can be executed based on financing facilities. He states that ‘’ identified sensitivities could have a positive or negative effect on the forecasted cash flows. Based on our actions, plans and expectations the 2018 financial statements have been made taking into account the continuity assumption.’’ IBG has valued the fiscal compensable losses on € 7.3 million. In case the forecast is worsening, causing the results to negatively deviate from the projections, Louwers does not exclude the idea that (a part of) the active deferred taxes must be written off.

Financial year 2019

The biggest part of IBG’s financing is brought by her major shareholder NPM Capitol N.V., who in 2018 contributed a capitol of € 20.5 million. Also in 2019 NPM has shown intention of investment, aimed at financing the strategic goals and agreements have been reached to continue the financing in financial year 2019. For financial year 2019 an increase of the net results is expected. Louwers predict that ‘’after the course change of 2018 IBG will this year further expand and consolidate the new organization. With this the right actions have been undertaken and they should lead to an improvement of the results. The new organizational structure and the weekly improvements support this ascending movement. That is right on time for the fiscal impulse that that the business lease of bikes for employees will get in 2020, which requires a full service package.’’