Velo Media

Bad Medicine: Trek Closes Italian Subsidiary

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We are on the heels of another closure in the cycling industry. News broke last week that the Trek Italy office in Bergamo will be shuttered.

 

The functions of Trek Italy subsidiary will be merged into the newly formed Trek Southern Europe office in Madrid, Spain. The official narrative coming from the new CEO Oliver Pelous is about efficiency “We see several benefits in creating the southern European market, in addition to purely improving the efficiency of the group structure”

 

Efficiency is generally a PR friendly way of saying cost cutting. Trek announced back in early March the intention of cutting 10% of the workforce in order to ‘right size’ the business. Apparently the PR team is still at full force.

 

I reached out to Trek Italy on the matter but they declined to comment.

 

Of the 27 employees currently working in the historic Bergamo office, 8 will be laid off and the others will be working remotely. Of the personnel that will be leaving the company includes the long time Managing Director of Trek Italy Davide Brambilla. Brambilla joined Trek in 2010 and is among the most experienced managers in the cycling businss, having previously managed Bianchi and Legnano bikes.

 

Although there will be existing employess working in a remote capacity, without a direct team in constant collaboration, this change will hurt the effectiveness of the brand in the Italian market. With that said, they probably don’t have a choice in the matter, the numbers likey don’t add up.

 

STEADY STREAM OF BAD NEWS

 

There has been a steady stream of unfortunate news over the last few weeks coming out of the Industry. Most recently Kent Outdoors, the owner of the historic Mountain Bike brand KONA is apparently seeking a buyer for the brand that was acquired just 24 months ago. A bizarre story also broke in early April of an altercation between managers at the offices of SCOTT Sports in Switzerland in which the police were called to calm the situation.

 

DO WE SEE THE LIGHT?

 

At the risk of making some very broad generalizations based on my own personal experience, as opposed to a year ago, I have noticed less discounting. Previously my inbox was constantly full with sales from some of the top brands in the market, now things seem to be getting back to normal. Although we are right at the beginning of the season, so only time will tell.

 

The question I keep hearing from folks in the industry is, are we finally seeing a bottom? What I can say is that by seeing these large structural changes, brands are definitely still feeling pain. Only through these structural changes will we exit the crisis, it’s bad medicine that must be taken.

 

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