Made.com puts itself up for sale

Made.com puts itself up for sale

Made.com has put itself up for sale after the online furniture retailer concluded it would be unable to raise fresh equity to help sustain a business hit by a collapse in UK consumer confidence and supply chain disruption.

Having gone public last year, Made.com warned on profits in July and last month said it would need to raise more cash. The company said on Friday it would look at a range of options including a sale and possible debt financing.

“The prevailing conditions are not supportive at the current time of raising sufficient equity from public market investors,” Made said in a statement.

It also said it was withdrawing its full-year financial guidance because of “the unexpected events of the past two weeks in the UK compounding the deterioration of trade”, in an apparent reference to the death of Queen Elizabeth II.

The shares fell another 32 per cent in early trade on Friday, having collapsed from an IPO price of 200p in June last year. The group’s market capitalisation now stands at just £15mn against an estimated requirement of at least £50mn in new funding.

“While the group has had a number of strategic discussions with interested parties, the group is not in receipt of any approaches, nor in discussions with any potential offerer, at the time of this announcement,” Made said.

Although Made’s finances are stretched and trading is difficult, it has built up a customer base of more than 1mn people since launch in 2010 and its distinctive designs have a following among young and affluent customers.

The list of companies that could potentially be interested in its brand and customer base is long. Frasers, the sportswear and department store group, acquired Sofa.com from its lenders in 2019 and John Lewis is also seen as a possible acquirer — its former finance director, Patrick Lewis, is now Made’s chief financial officer.

Private equity operators have in the past owned DFS, the UK market leader in sofas, and bed retailer Dreams while in 2019 Alteri acquired Bensons for Beds from South African conglomerate Steinhoff.

Several bankers cited Dunelm, a retailer of homewares such as curtains and bedding that has ambitions to move into furniture, as another potential acquirer. But Dunelm sees itself as a price disrupter in furniture, a position that would sit oddly with Made’s more upmarket wares.

Made derives almost half its revenue from outside the UK, unusual in a fragmented market where there are few pan-European operators, and could appeal to companies such as Frankfurt-listed Home24 and Westwing. But they have also seen steep declines in their share prices.

Maisons du Monde, a French furniture retailer with a similar design-led ethos, could also be interested. One person with knowledge of that company said it would be a good strategic fit but that the price would need to be rock bottom given Made’s financial condition.

The group said a fall in consumer spending had left it having to slash prices to shift inventory. At the same time, its freight costs have ballooned from £8.2mn in 2020 to £45.3mn last year — costs it has not been able to pass on to consumers.

The group also announced sweeping cost cuts, first reported by the Financial Times on Thursday.

“A process has commenced to implement additional cost reductions, including a strategic headcount review, within the next few weeks, whilst retaining appropriate skills and resources to be able to conduct the strategic review process effectively,” Made said.

Leave a Reply

Your email address will not be published. Required fields are marked *