retail

Made.com considers raising fresh equity after tough year

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Made.com is looking to cut costs and refine its strategy ahead of a fundraising this year that is expected to raise about £50mn

The online furniture and homewares retailer said on Thursday that an equity offering was one option under consideration.

Bankers warned that the company would find a £50mn equity issue challenging, given that its current market value is just £38mn. They added that Made needed to set out a revised narrative, as peer AO World had done.

The electricals retailer raised £40mn in July but promised investors it would lift underlying profit margins to 10 per cent by the end of the year by focusing on the UK and closing down its German operation.

“Made is one of a number of ecommerce companies where the profit hasn’t really come through in the way that was once imagined,” said one banker. “They could do to set out clearly when they expect to become cash flow positive.”

At its initial public offering last year, Made set out a firm target of £1.2bn of annual sales by 2025 but had vaguer aspirations in terms of profitability and cash generation. As equity markets have corrected, investors have become less easily persuaded by promises of rapid sales growth.

Made had a tough first year as a quoted company. Delays and bottlenecks in global supply chains forced it to commit more cash to inventory. But it was hit by a downturn in demand as consumers retrenched, leaving it needing to slash prices to clear surplus stock.

It has already sharply reduced sales and profit targets for the current year and said it would “look at all non-strategic fixed costs” in response.

It has no debt but said in July that it expected to finish its financial year with net cash of just £5mn, implying it could burn through almost all of the £100mn proceeds of its June 2021 flotation within 18 months.

It has since appointed PwC to advise on cost reduction plans, as reported by Sky News.

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