Northgate Cycles plc was founded in Nottingham in 1962 and became one of Britain's best-known bicycle brands. It designs bikes in the UK and has them assembled by a contract manufacturer in Taiwan. Most sales are made through independent bike shops and large sports retailers.
During the pandemic, demand for bikes boomed and Northgate increased its inventory sharply. When demand fell back in 2023, the whole industry was left with too much stock and prices were cut heavily. Northgate's profits fell and its share price halved.
The new chief executive, Dana Okoro, believes the future lies in electric bikes (e-bikes). The UK e-bike market is growing at about 12% a year, while sales of conventional bikes are flat. Northgate's own e-bike range is small and receives mixed reviews. Dana has proposed acquiring Volt Velo Ltd, a London start-up with a highly rated e-bike, a strong social-media following and its own patented battery technology. Volt Velo's founders would want £24 million for the business and seats on the Northgate board.
Some directors argue that Northgate should instead focus on its core brand: cut costs, reduce inventory, and sell more bikes directly to consumers online, where margins are higher. The finance director warns that the acquisition would need to be financed mainly by a bank loan, at a time of high interest rates.
Northgate's workforce of 380 is mostly in design, marketing, sales and distribution. Many staff are long-serving and proud of the brand's heritage. Dana's management style is fast and decisive, and two senior managers left within six months of her arrival.
Appendix 1: Northgate financial data (£m)
| 2023 | 2024 |
|---|
| Revenue | 96.0 | 84.0 |
| Gross profit | 31.7 | 23.5 |
| Operating profit | 6.2 | 1.3 |
| Inventory (year end) | 41.0 | 33.0 |
| Current assets | 58.0 | 47.0 |
| Current liabilities | 30.0 | 31.0 |
| Non-current liabilities | 10.0 | 10.0 |
| Total equity | 52.0 | 50.0 |
Appendix 2: Volt Velo Ltd
| 2024 |
|---|
| Revenue | £7.5m (up 60% on 2023) |
| Operating profit | £0.4m |
| Average selling price | £2,400 per bike |
| Customer review rating | 4.7 / 5 |
Appendix 3: Market information
• UK conventional bike market: about 2.0 million units a year, flat.
• UK e-bike market: about 220,000 units a year, growing about 12% a year.
• Several large Asian manufacturers are entering the UK e-bike market with lower prices.
• The pound has weakened against the New Taiwan dollar over the past year.
• The government is consulting on new safety standards for e-bike batteries.