16th May 2022 17:09
(Alliance News) - Made.com Group PLC's outlook has been weakened by ongoing consumer confidence worries, and the sofa seller kicked off the new week with a sharp share price fall.
Made.com shares closed down 15% at 54.20 pence each in London on Monday. The stock has fallen roughly 75% since floating at 200p each in June 2021.
It warned of "highly challenging" market conditions.
Made said trading has been volatile and more challenging than anticipated in recent months.
The company lowered its full-year guidance due to a weak market backdrop.
Made tips gross sales to remain flat or to decrease by a maximum of 15% compared to the year before. In 2021, gross sales amounted to GBP434.0 million. In March, the company initially guided for full-year gross sales of GBP500 million to GBP540 million, reflecting a 15% to 25% increase in 2022.
It said that "third-party data" suggests that the online furniture and home market is down 30% to 40% so far in 2022.
The retailer stressed that compared to the market, its gross sales were down "only" 10% in the first quarter of 2022 versus the same period in 2021. Compared to the first quarter of 2019 gross sales were up 64%, Made added.
AJ Bell analyst Russ Mould commented: "Investors don't care that sofa seller Made.com is outperforming the market given the whole sector is experiencing a sharp decline in trading thanks to the cost-of-living crisis. As far as investors are concerned, Made.com's earnings expectations have been sharply downgraded which means the stock is far less appealing to own, hence the big share price slump on the news.
"Made.com's profit warning coincides with the appointment of new finance boss Patrick Lewis who now has the perfect excuse to have a good look through the cupboards and further reset expectations once he starts next month."
Made announced the appointment of Patrick Lewis as chief financial officer with effect from June 27. He gained "valuable insight" into e-commerce while he worked as a non-executive director at Ocado Group PLC. Further, he was previously employed as CFO on the John Lewis Partnership PLC board.
Brokerage Liberum rates Made at 'buy'. It noted the company could face a takeover tilt.
Liberum analysts explained: "Current valuation, balance sheet strength combined with long-term prospects mean the company looks vulnerable to an approach. This could support the share price, in our view."
By Eric Cunha; [email protected]
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