23rd Sep 2022 09:17
(Alliance News) - Made.com Group PLC on Friday said it will conduct a formal review of its strategic options, as the sofa seller grapples with tumbling demand amid cost-of-living pressures.
Options include a sale process or a strategic investment.
Made.com shares fell 18% to 4.70 pence each in London on Friday morning. The company floated on the London Main Market only last year, listing at 200p in June 2021. It was worth GBP775 million then, but its market capitalisation now is under GBP20 million.
Discretionary consumer spend has taken a hit since last year, Made.com said on Friday, and supply chain worries have intensified. The London-based company said "costs must be reduced further", and it will conduct a headcount review.
On Thursday, the Financial Times had reported that Made.com plans to shed more than a third of its workforce.
In March, Made.com released its 2021 results. In that year, pretax loss widened to GBP31.4 million from GBP14.6 million in 2020, despite revenue growth of 50% to GBP372 million from GBP247 million. Administrative expenses increased to GBP122.2 million from GBP88.2 million and cost of sales widened to GBP199.8 million from GBP115.7 million.
In a July trading update, the company said gross sales in the first half of 2022 were 19% lower year-on-year, though up 55% from pre-virus levels, and it noted that profit for 2022 is expected to take a GBP20 million one-off hit from clearance work related to excess inventory and additional costs in its supply chain.
In the July update, Made.com lowered its 2022 revenue guidance to a range of a 9% fall to a 24% fall from between 8% growth and a 7% decline previously.
The wider strategic review Made.com announced on Friday will mull its balance sheet options, which include debt finance, strategic investment or even a sale of the company. PricewaterhouseCoopers LLP will lead the strategic review and formal sale process.
Made.com noted that it has not received any takeover approaches yet, but has had "strategic" talks with some parties. The company also withdrew annual guidance, amid "deterioration of trade".
By Tom Budszus; [email protected]
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