Struggling online retailer Made bowed to financial pressure and went up for sale amid a severe downturn in the home furnishings market as consumers facing a cost-of-living crisis cut back on big-ticket items. .
Shares of the company fell nearly 30% in morning trading.
The group, originally founded by former Lastminute boss Brent Hoberman and investor Ning Li, said it hit rocks last month as it sought a last-minute cash injection from investors to shore up its balance sheet. Hoberman and Li have since left the business.
Made said: “While the group has had a number of strategic discussions with stakeholders, the group has not received any approach, nor is it in talks with any potential offeror, at the time of this announcement” but had now reached the decision that one of the options for its future was to enter into a “formal sale process”.
Nicola Thompson, head of Made, said: “Made is not alone in being affected by supply chain issues and cost of living declines, but we are taking steps to ensure our continued success, supported by our strong brand. , an excellent range of products. and a large and loyal customer base in multiple markets.”
The group’s shares have plunged almost 95% in value over the past year and the group has instructed PwC consultants to explore a restructuring of the group and implement possible cost cuts, including redundancies.
At the time, the retailer said it would “consider all options to strengthen its balance sheet.”
Made said: “The first headwind is the decline in discretionary consumer spending stemming from rising inflation and a sharp drop in consumer confidence.
“During the first half of 2022, Made’s major markets experienced adverse developments in macroeconomic conditions, including economic slowdown, rising commodity and energy price inflation, spurred by the U.S. invasion of Ukraine. from Russia, which has caused greater uncertainty about the duration and further deterioration of these adverse conditions and other contributing factors.
“These adverse market conditions have caused a sharp drop in consumer confidence and have contributed to a significant withdrawal of discretionary consumer spending.”
The company said it was forced to sell products at deep discounts to address inventory levels and adjust to those “adverse market conditions,” but it also found itself in an “overstock” position in inventory due to the recession in consumer spending.
It also said that the economic downturn had made it “challenging” for the group to acquire new customers at economically attractive prices, resulting in “higher customer acquisition costs” and that “the destabilization of supply chains resulted in a lower reliability and higher costs.
The company said freight costs had risen from £8.2m in 2020 to £45.3m in 2021.