“Wahoo is taking chunks out of Garmin’s share” says my LBS

Wahoo is taking chunks out of Garmin’s share

 

DCRAINMAKER’s week-in-review usually has some interesting endurance tech stories and the latest edition was no exception. I was intrigued by the story which cited Moody’s downgrading of Wahoo’s corporate debt. If you are interested in the higher echelons of all-things-financial then that’s an excellent article. I’m more interested in the sales/marketing side of things and I’ve taken out a few gems that I personally find interesting plus got some intel from some more subjective sources which I’ll outline below.

Here are the quotes from Moody’s and S&P Global via SGB Media

Wahoo’s liquidity will be constrained over the next 12 months by Moody’s expectations of negative free cash flow of around $30-$35 million and high reliance on its $30 million revolver facility.

Wahoo has a good record of successful new product launches and it expects significant sales and earnings contribution from several new products and refreshes in late 2022.

There is also uncertainty regarding macro-economic conditions, particularly in Europe, the company’s largest market,

Additionally, the company faces intense competition from larger competitors such as Garmin and, to a lesser extent, Peloton, who are engaging in aggressive promotional activity to sell down excess channel inventory.

My Thoughts

OK let’s get the new product bit out of the way. I’ve no intel on this and respect my contracts in any case (NDAs). To any casual observer of product cycles, 2022 coincides with a refreshed Wahoo ROAM and refreshed KICKR. I think there is also something a little unexpected but not a Rival Gen 2.

I’m surprised that Europe is Wahoo’s largest market. Essentially this statement will probably mean that Germany and the UK outstrip the USA in terms of sales, with Spain, France and Italy together making a decent contribution. Wahoo definitely sells well in the  UK, you see them everywhere and, as I’ve said numerous times, everyone I cycle with uses Wahoo. But for all of that to outrank the USA I do find surprising.

My view on the strong Wahoo sales position was also bolstered by a very recent visit of mine to my local bike store (LBS) where I usually quiz some unsuspecting sales assistant on what’s happening. This particular LBS is a big one in UK terms and the sales assistant pointed out that Wahoo takes a BIG chunk out of Garmin sales of bike computers. On a separate visit to the same store, there was a big cardbox box full of ELEMNT bike computers (IIRC) and the sales rep then said that these would all be sold today and tomorrow (over the weekend). There must have been 30-50 units in there and the sales would be counter sales and nothing to do with online sales.

Again the sales assistant pointed out that people buy Wahoo because a) they just work and b) they are simple to use. I felt vindicated as I’ve said the same thing for years.

Finally, I wasn’t sure where the article’s take on ‘aggressive promotional activity’ came from. Sure there have been sales but aggressive? I wouldn’t even call them unusual. Perhaps someone can point out in the comments some deals they’ve seen in their country. You have to wonder if the excess channel inventory comment explains Garmin’s (B2B/channel) sales over the last few years ie explains its excellent financial performance over the pandemic because it is selling well to the shops but the shops are not selling as well as they might to us. Or maybe Garmin stuff just isn’t selling well (see Q1 results)

Take Out: I confidently predict that both Garmin and Wahoo will still be in business by Christmas and with some new products to show us. 😉

 

And, yes “Wahoo is taking chunks out of Garmin’s share” really was a pretty much verbatim, unprompted quote from my LBS.

 

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10 thoughts on ““Wahoo is taking chunks out of Garmin’s share” says my LBS

  1. Cyclingtips are reporting (in the Nerd Alert podcast) that Wahoo are making significant redundancies (~90 people), primarily in their watch division.

    1. i’d heard of zwift doing that?
      i’ve not listened to the podcast tho
      nothing on their site: https://cyclingtips.com/?s=wahoo
      that’s a LOT of people for a watch division. That would be closing down the entire watch team at those levels i would guess? yet there are still decent firmware coming out, even this week for RIVAL

  2. I wouldnt be suprised if the Nordics buys at the same level as UK on indoor equipment. 40% of the population, but 99% of cold weather.

  3. If true, yes, you would have to assume that means there will be no successor to Rival.
    Wahoo have a very loyal and growing following but I think a new generation of Edge devices with strong solar and usability improvements will be significant competition.

  4. There’s currently a 80€ discount on Rival in France….Not much else I’ve seen.
    And a new FW just came out on May, 16th:
    ELEMNT RIVAL 1.48.22 – 16 May, 2022

    Added: Post-workout summary page now shows completed GPS track
    Added: Music Control Page for Android devices
    Fixed: Activities with a Planned Workout combines all laps into a single lap
    Fixed: Treadmill workouts combine all laps into a single lap
    Updated: Improved GPS functionality

    Well…That’s nice.
    Thus I still have a semi functional Stryd/Rival pair where I only get W values and nothing else (advanced metrics or pace/distance from Stryd) despite a new watch sent by Wahoo. Stryd is quite quiet and just tell me that everything’s OK…

    On a positive basis, Ive done my first OWS with rival and the track is top notch.
    But I’d prefer my Stryd to work 🙂

  5. Hey Jeremy, Stryd has made no recent changes to our integration with Wahoo. Historically the integration between the two has worked well. We’re currently discussing what changes Wahoo made in their firmware that may have negatively impacted the integration. Stay tuned, and feel free to submit a ticket with us here: https://support.stryd.com/hc/en-us/requests/new

  6. Hi Greg and thanks, your answer is much appreciated (I’l try to stop bringing this issue to every site I comment on… :p )
    I’ve already opened a ticket at Stryd, and Wahoo, who replaced my watch, without any luck at fixing this issue.
    The new one behaves the same….
    Wahoo is still looking on their side, but that’s all I’ve got.
    Even John Trainor, who seems to be head of R&D department at Wahoo answered me on FB saying that he’s faced the same issue….and have no clue on its correction….

    It’s a shame, because the instant pace from the RIval is far from ideal (or I have bad habits with my Suunto who gives me a very clean and smooth running pace….If I could just make a baby out of these two watches…)

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