Despite being a well-established distributor in the bicycle trade you won’t have missed the fact that Fisher Outdoor Leisure went through a rebuilding exercise a short while ago. James Browning’s appointment as CEO was perhaps the most visible sign the distributor was tackling its issues head on. Now he’s been in the role for upwards of 12 months.
“Our last financial year was a really good ‘sort out year’,” Browning tells BikeBiz. “In terms of the business we got the right structure and the right people and some reallocation of responsibilities.”
Tough decisions were made, including culling brands.
“We went through a review, out of which we decided to exit all of our own-brand initiatives. We came out of all of that because we believed we should be focusing on being a great distributor rather than building our own brands. Stick to what you’re good at and be even better at what you’re good at, was the thinking behind that.”
Fisher’s finances also got tightened up, erasing some long-standing debts dated back from the takeover of the business. Browning explains: “We went through an exercise of tidying up our balance sheet. I don’t know what the noise from the industry was about Fisher’s finances, but going back in time you look at our accounts and we had millions of debt on our balance sheet. Even though every year the venture capitalist said they won’t call on these loan notes they were still there, so we sat down with the venture capitalist and probably the most significant thing was that we got them to write off £13.8million* debt off that was sat on our balance sheet.
“We paid down some bank debts too, so we took about £14m* in debt out of our balance sheet. So as a business we are now totally deleveraged. We have got a £1.75m term loan with HSBC and we fund our working capital by drawing down against invoices – so the classic model. That’s a big thing. We delivered a profit number of £1.3m, which evened out about £900,000 operating profit, so not massive but a credible profit.
“Those accounts are at companies house, so any ‘Weary Willies’ saying Fisher are going to go bust can see the debt is down and the profit is working. It was a really nice way to wrap it up on a strong financial note.”
This year has seen Fisher Outdoor get off to an eye-catching start, not least with the Campagnolo shared distribution news, a deal that has been in the works for some time. Early Rider’s signing is also something the firm is very excited about.
“Then there’s the Essentials catalogue, which is part of the business rethink. What can we do better? We thought offering everyday products at good prices with a good service wrap around.
“These things have kept us occupied.”
Other notable developments included the launch of initiatives like the Zipp dealer margin support programme.
“The cycle sector is going to grow, but each of the sales channels will have different opportunities. The reality is that brands, and us as distributors, need to exist in all channels. The IBDs are the brand builders, then online retailers do a spectrum of things, from information provision and brand building – the good ones – all the way through to price fulfillment and the customers choose which they use. Then there’s the end of life guys, like eBay – the brand has to play in each of those channels. If you look back, brands that stop participating in that brand-building channel find they can’t exist online only.
“In our Zipp margin support letter to IBDs we said ‘we get it’. Why the hell would they support a brand when they’re educating the public and the customer then turns around and says they can get it cheaper online?
“In the first three weeks of launching the initiative we had doubled our stockist numbers for Zipp. It’s not bullshit! And I can see the IBDs dilemma: If you see how much a Zipp wheelset is, then you don’t want to invest in a range if you might not make a return. It’s a lot of money. The fact we doubled numbers shows the IBDs get it. The response has been great, but can we do it on other products?” Well can they? That will depend on whether the commercial assumptions made around the programme pan out as expected. If they do, then Fisher will definitely be looking to roll the support programme out to other brands.
“We have other initiatives too, like working with IBDs so they can offer a broader range of products without having the inventory risk. We’re launching a programme around that in the next few months.
Browning has gone on record to say he wants Fisher to be as easy to deal with as possible. Has the firm made good on that aim?
“We have taken steps. We did increase credit limits, hopefully the Zipp margin support makes it easy to higher value product from us. The Essentials offering should help too. Then there’s a website that’s more functional and useful for dealers. We’ve more telesales heads and more field sales people. Hopefully all that makes us easier to deal with, but there’s still a list of things. Next in our sights is a mundane but very helpful thing – to let people pay their bills through the site and do their returns on our B2B without having to call us up. Simple things like that.”
With its troubles overcome, is Fisher now looking to build the business, rather than make more fundamental changes?
“Absolutely, that’s it. What needed to be fixed to stabilise the business is now done. It’s now nice to see us coming out of that – we have plenty of things that we’d like to do.
“I think distributors are going to have to do more. In the past, distribution was all about logistics and fulfillment. In an increasingly sophisticated market, distribution is now all about adding value to your customers and to the brands that you represent.
“As the market gets more sophisticated, competition will increase. We’ll see margin pressure for retailers, distributors and suppliers. Everyone will have to get smarter or do more to justify the margin they want to keep. I think you’re also seeing an interesting shift in multi-distributed brands. You’re now seeing more multi-distribution agreements cropping up which is a sign of the sector maturing. SRAM did it with Raleigh, Campag have done it with us. I’m not surprised that is happening.”
Before BikeBiz leaves Fisher’s St Albans HQ there’s time to squeeze in a few hints about freeing up senior management time to spend courting new brands as well as the firm “getting our hands on a good MTB brand”.
Browning expands: “It feels like we have done the hard work, financially and strategically. It’s now about the results of that. We’d be disappointed if Campag and Early Rider were the only new brands we bring to market in the next 12 months. That’s not our intention.”
*These figures were incorrectly stated in the print edition of BikeBiz (March).