retail

Made.com slashes revenue and profit outlook as consumers cut spending


Made.com has slashed its revenue and profit forecasts for the year as consumers cut back on non-essential spending as their incomes are increasingly squeezed.

The online furniture retailer on Tuesday said it expected gross sales for 2022 to fall between 15 and 30 per cent against a previous forecast of flat to 15 per cent growth, made in May.

The company predicted a loss before interest, tax, depreciation and amortisation of £50mn to £70mn compared with a previous expectation of no more than £35mn.

It is the third profit warning from the group, which floated just over a year ago, but it said it was now considering another fundraising to shore up its balance sheet.

Shares in the company were down 37 per cent to 24p in early London trading and have now fallen almost 90 per cent from their 200p float price in June last year.

Line chart of share price (p) showing Made.com continues post-IPO slide

Made, whose design-led furniture is targeted at younger consumers, struggled with supply chain disruption last year and like many retailers built up more stock than would normally be the case to maintain product availability and reduce delivery times.

However, as the outlook for consumer spending in the UK has darkened, it has been left with too much stock and been forced to cut prices to shift it. Furniture has been the worst-performing category in the British Retail Consortium for the past two months.

Nicola Thompson, chief executive, said it was clear that things were
“tough for consumers at the moment”.

“Understandably, we’ve seen a worsening in consumer confidence since May and this has had an impact on this period’s performance,” she said. “As such, it’s prudent for us to take a conservative view of what we can expect in the second half of this year.”

Made’s first-half gross sales were down 19 per cent at constant exchange rates, though are still 55 per cent ahead of pre-pandemic levels. Active customer numbers also fell slightly.

Gross margins were hit by elevated supply chain costs, including higher than expected freight costs and “significant fuel surcharges”.

This year there will also be about £20mn of one-off charges to fund discounts on excess stock and meet additional supply chain costs, mostly incurred during the first half.

Made said it was actively addressing all non-strategic fixed costs and reviewing headcount, stock buying and warehousing. It expected these savings to amount to between £10mn and £15mn but they would mostly be delivered in 2023.

It added that it was “considering options to . . . strengthen its balance sheet”. It ended the first half with net cash of £31mn after heavy investment in inventory, and expected to finish the year with between zero and £30mn.

House broker Liberum said the issues at Made were “no different to the broader homewares and furniture category”, but it nevertheless slashed its target price on the shares from 150p to 85p.



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