Scott turns to parent company for a £137 million loan to improve its financial liquidity

Bike brand Scott has received a loan of 150 million Swiss Francs from Korean parent company Youngone in a bid to improve its liquidity.

In the financial report detailing the loan that will be paid in instalments with a 4.6% interest rate, Scott has attributed the financial position to a high volume of stock. Scott is not the only brand suffering this fate at the moment, with many global brands suffering from the burst of the pandemic bubble.

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The demand for cycling products in 2020 and 2021 grew exponentially when compared to previous years. More and more people were exercising and keeping fit during the pandemic, as well as seeking escapism and distance from the confines of their homes. This sudden increase provoked a knee-jerk reaction from the industry, which scrambled to keep up with demand.

For a lot of brands, this meant significantly upping the volume of stock ordered to be manufactured. As the world started to return to some level of normality, the demand for cycling equipment quickly tailed off, far faster than most brands had anticipated. This resulted in them sitting on high volumes of stock that they are still unable to shift.

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Having such high-value inventories results in a financial predicament where a lot of the brand's capital is tied up in stock. For Scott, this is where the loan comes in. It aims to inject some capital into the brand that will increase the liquidity of the business.

It does appear that these ripples are being felt across the market with Canyon announcing losses for the last year as well as the ongoing Wiggle saga.

Scott initially sold a 20% share to Youngone in 2013 with the company acquiring a majority 50.1% share of the business in 2015. Scott currently sponsors WorldTour team dsm-firmenich PostNL with the team using the Addict RC, Foil and Plasma bikes.

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Scott

Scott is a bicycle manufacturer based in Givisiez, Switzerland. The company produces a range of bikes across multiple disciplines, from road and gravel to off-road and kids-specific bikes, alongside equipment and clothing, too. Scott also has winter sports, motocross and running product ranges.