Struggling furniture seller Made.com reveals it might be sold off

Controversial retailer Made.com could be sold or merged after bosses determined it would be unable to raise sufficient equity from shareholders.

The online furniture seller said last month it was considering a capital increase to try to bolster its balance sheet, which has been battered over the past year by falling sales and rising losses.

After concluding that such an option is not feasible, in part due to the current trade uncertainty, the company has embarked on a strategic review to assess alternatives.

These include a strategic investment in the group by a business partner, a merger with another company, debt financing or a formal sale process.

Made said it had held talks with interested parties but had not received any takeover approach, nor was it currently in talks with potential buyers.

In addition, the retailer announced it would continue to cut costs, including a workforce review “within the coming weeks”, after already implementing a staff freeze.

The Financial Times reported yesterday that the company is considering laying off up to 35 percent of its workforce and has already started consultations with certain employees who will leave in October.

According to the FT, Made’s CEO Nicola Thompson sent an email to staff last week warning that “some very difficult but necessary changes” needed to be made.

Made surfaced on the London Stock Exchange 15 months ago following a pandemic-induced windfall spurred by lockdown restrictions that forced homeware stores to temporarily close their doors.

People were also spending more and more time indoors, giving those with extra savings more opportunity to refurbish their properties, while a stamp-duty vacation encouraged a boom in home-buying.

But since its IPO, the London-based group has faced deteriorating supply chain problems, with some customers having to cancel deliveries or wait months and face much higher freight rates.

In the second half of last year, Made said freight costs skyrocketed from just £8.2m in 2020 to £45.3m, and it has not been fully able to pass on these additional costs to customers.

The problems have been exacerbated this year by rising energy and commodity prices and other inflationary pressures, contributing to widespread economic stagnation and declining consumer confidence.

The company responded to this pressure by selling inventory it had stocked in response to logistical issues at discounted prices, severely impacting margins.

Made lowered earnings expectations for the third time this year in July. It announced today that it had withdrawn its full-year outlook amid ongoing economic uncertainty.

Made.com shares was down 19.7 percent to 4.62 pence by morning trading on Friday, meaning their value is down more than 97 percent since the first public offering.

“Whatever happens, it looks like existing shareholders could be wiped out or left with only a fraction of their original investment,” said Russ Mold, investment director at AJ Bell.