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[In2001] a British team bought the business from its American owner. “The company had convinced itself the decline was market-led, which is utter tripe,” said Mark Gouldthorp, UK managing director, who took part in the management buyout.
In March it recorded a 12-month profit of £150,000 on sales of £35m — its first profit in four years. “Our prime supplier in Malaysia pays a typical monthly wage of £130,” said Gouldthorp. “ThatÂ’s a tenth of the cost in the UK.” In the past 18 months Gouldthorp and chairman Alan Finden-Crofts have masterminded a rescue that has included the merger of its two UK businesses — bikes and spares — the introduction of a £500,000 computer system and replacement of the management team. These measures helped to slash costs by £1m a year and boosted gross margins from 15% to 25%. Gouldthorp: “ItÂ’s been death by a thousand cuts — a steady, unremitting reduction in headcount rather than fundamentally addressing the company structure.” …In the days when Raleigh was doing well, its cavalier attitude toward dealers created problems that it is now having to resolve. “At our low point last year we had fewer than 400 branded dealers,” said Gouldthorp. “Our business went down 30%.” Raleigh has since expanded its dealer network by better understanding its needs.
Gouldthorp hopes his efforts will boost revenue by up to 50% in five years and that gross margins will stretch toward 30% if offshore contract manufacturing proves efficient enough.
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