Many people close to the mountain biking community say Rocky’s woes are indicative of the tough times plaguing the industry after its pandemic bubble burst.DARRYL DYCK/The Canadian Press
Rocky Mountain Bicycles has been a cornerstone in the mountain biking community since it began testing its bikes on the legendary trails of Vancouver’s North Shore in 1981.
But in December, the revered brand shocked industry players when it announced it would restructure to seek protection from creditors under the Companies’ Creditors Arrangement Act amid “unprecedented financial pressure.”
According to court documents filed on Dec. 19, Rocky’s parent company, Industries RAD Inc., had an estimated debt of around $70-million and Rocky owed its creditors about $13-million.
The financial difficulties being faced by Industries RAD Inc. can be directly attributed to Rocky, court documents state, since the parent company’s other division, Faucher Industries, is profitable and has reported stable revenues for the past three years.
Many close to the sport say Rocky’s woes are indicative of the tough times plaguing the industry after its pandemic bubble burst, with one expert predicting more mid-size brands will be forced to consider their options.
Sales for bikes and other outdoor gear boomed during the COVID-19 pandemic when indoor activities were limited or cancelled. But the market high was short-lived and demand fell off, leaving industry players at every stage of the supply chain overstocked and with nobody to sell to. Today, factors such as a competitive used bike market and a customer base whose budgets are tightening owing to inflation continue to compound the fallout of the pandemic.
“The pandemic was a drug because whatever we had, we sold. Then, poof, after the pandemic, suddenly the sales slowed down, too many people had too much inventory worldwide,” Raymond Dutil, head of Rocky Mountain Bicycles, said in an interview Tuesday.
In the fiscal years 2023 and 2024, Rocky generated net losses of $11-million and $10.5-million, respectively, according to court documents. In the past 12 months, it laid off 30 staff and sent notices to some stockists saying it wouldn’t be able to fulfill orders for the upcoming season because of a lack of capital.
On the North Shore, a place steeped in Canadian mountain-biking history, those who have grown up around the brand said Rocky’s recent announcement was heartbreaking.
“It’s just really sad to see a company that has done so much good and is such a rad and cool company struggle,” said Lucy Van Eesteren, a 19-year-old mountain biker from Squamish, B.C., formerly sponsored by Rocky Mountain.
Rocky isn’t the only player in the sector taken to the brink in recent years. Ken Maude, owner and president of Lynn Valley Bikes in North Vancouver, said the announcement reminds him of a similar situation with Kona Bikes, another brand with B.C. roots, which sold to U.S.-based sporting goods conglomerate Kent Outdoors in 2022 when sales were still riding a pandemic high. A couple of years later, Kona was bought back by its founders after Kent Outdoors announced layoffs.
Only days before Rocky’s announcement, U.S.-based GT Bicycles Inc. put out a statement saying it was pausing new product releases while it streamlined its operations. According to a report by Bicycle Retailer & Industry News, GT’s plans included layoffs before year-end. Mr. Maude said the announcements from Rocky, Kona and GT are a sign of what’s to come.
“A lot of brands have been suffering the last couple years with really low margins and low sales. When you combine those two, the cash flow just gets destroyed,” he said.
At his store, which is idyllically located on the doorstep of the North Shore’s trail system, Mr. Maude said he’s selling bikes below wholesale prices because of the oversaturated market. This affects his ability to pay back brands, like Rocky, who sell him bikes on credit, he added.
“We basically are in the business of selling the bikes to pay Rocky and that’s not enough for us to even keep our lights on,” he said, adding that the effects of the postpandemic bust trickle all the way down from manufacturers to storefronts.
After 15 years in business, Mr. Maude said bikes have become the lowest-margin item he sells in his store, and he’s now much more risk-adverse when ordering them. Instead, he’s focused on selling bike maintenance services and products like helmets, which need to be replaced every few years.
Pete Roggeman, publisher of the mountain bike news site NSMB.com, has been riding bikes on the North Shore since the nineties and worked for Rocky between 2009 and 2011. “I grew up in Vancouver. Rocky Mountain was always a big deal for me,” he said.
The news about Rocky initially came as a shock, he said, but he expects it won’t be the last of the mid-sized mountain-bike brands to begin surveying their options amid pandemic fallout and a tough economy.
“It’s a time when some who maybe don’t want to ride out several more years or take a chance of going under might change hands,” he said.
Mr. Dutil said Rocky’s restructuring is an opportunity to rethink how it does business, simplify its operations and find new investors. In the meantime, he said it will be business as usual for the brand.
Potential investors have until the end of March to bid on Rocky. Mr. Maude said he’s going to be careful about what he orders from the company because the restructuring process has created a lot of uncertainty around the future of the brand.
Mr. Maude said his biggest worry is that Rocky will lose touch with its North Shore roots, especially if it attracts interest from investors outside of Canada.
“It’s a local brand that has tons of heritage here and most of the people in our area have ridden a Rocky at one point in their life,” he said.