25th Oct 2022 17:28
(Alliance News) - Made.com Group PLC's miserable stint on the London Stock Exchange took another ugly turn on Tuesday, with the furniture seller's future now hanging by a thread.
The sofa seller, whose fortunes massively improved during the pandemic, has faced harder times as lockdown measures ebbed.
Consumers who once had all the time in the world to renovate and buy more items for their homes, are now allowed to spend their money elsewhere. High street shutters were lifted, skies re-opened and bars and restaurants have allowed punters in again.
All-in-all, it was a perfect storm for Made.com, which has failed to hit the lofty sales growth figures it achieved during Covid.
Made.com debuted in London in June 2021 at 200 pence per share. It had a GBP775.3 million market capitalisation on admission.
On Tuesday, the stock closed down 93% at 0.50p, with its market cap almost wiped out at GBP2.0 million.
Helped by a boom in home improvement due to the Covid-19 pandemic, Made posted revenue growth of 17% in 2020 to GBP247.3 million. Then in 2021, also helped by lockdown restrictions, revenue jumped 50% to GBP371.9 million.
Since then, Made has reported a sequence of bad news. It lowered guidance for 2022 in May, and then cut it further in July.
Last month, it put itself up for sale. Earlier in October, there were some green shoots. It said it had received a "number of non-binding indicative proposals" during its formal sale process.
Little came from this interest, however, Made revealed on Tuesday.
"Following further discussion, those parties have all now confirmed to the company that they are unable to meet the necessary timetable. As a result, those discussions have been terminated and the company is no longer in receipt of funding proposals or possible offers for the issued and to be issued share capital of the company," Made said.
It remains in a formal sale process, but cautioned there is no certainty that a buyout will materialise.
Made.com added: "The board is considering the position and a further announcement will be made in due course. If further funding cannot be raised, or a firm offer for the company is not received before the company's cash reserves are fully depleted, the board will take the appropriate steps to preserve value for creditors. There can be no certainty that the terms of any offer or investment received will be suitable."
Made.com is also mulling whether a suspension of trading of its shares is "appropriate". An announcement in that respect "will be made in due course".
"It floated at a time when people were sprucing up their homes having spent so much time indoors during the various lockdowns. Demand for new sofas was high and a lot of investors presumed growth would continue to be good," AJ Bell analyst Russ Mould said in September.
"But Made.com quickly became unstuck thanks to supply chain problems with customers waiting months for their sofas to be delivered, leading to cancellations and frustration. Then the cost-of-living crisis bit and big-ticket items like a new three-piece were put on the back burner, all contributing to a severe slump in Made.com's share price and a slew of profit warnings."
By Eric Cunha; [email protected]
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