Troubled online retailer Made has bowed to financial pressure and put itself up for sale in the midst of severe downturn in the home furnishings market as consumers facing the cost of living crisis cut back on big ticket items.
Shares in the business tumbled nearly 30% in early morning trading.
The group, originally founded by former Lastminute boss Brent Hoberman and investor Ning Li signalled that it had hit the rocks last month as it sought out an eleventh hour cash injection from investors to shore up its balance sheet. Hoberman and Li have since left the business.
Made said: “While the group has had a number of strategic discussions with interested parties, the group is not in receipt of any approaches, nor in discussions with any potential offeror, at the time of this announcement”, but that it had now reached the decision that one of the options for its future was to enter into a “formal sale process”.
Nicola Thompson, boss of Made, said: “Made is not alone in being hit by problems in the supply chain and the cost of living squeeze but we are taking actions to ensure our continued success, supported by our strong brand, an excellent product range and a large and loyal customer base in multiple markets.”
Shares in the group have dived nearly 95% in value over the past year with the group instructing consultants at PwC to explore a restructuring of the group and to implement potential cost-cutting - including redundancies.
At the time the retailer said it would “consider all options to strengthen its balance sheet”.
Made said: “The first headwind is the decline in discretionary consumer spending stemming from increased inflation and a steep decline in consumer confidence.
“During the first half of 2022, Made’s core markets have experienced adverse developments in macroeconomic conditions, including economic slowdowns, rising inflation of commodity and energy prices, spurred by Russia’s invasion of Ukraine, which has caused greater uncertainties about the duration and further deterioration of these adverse conditions and other contributing factors.
“These adverse market conditions have caused a sharp decline in consumer confidence and contributed to a significant withdrawal of consumer discretionary spending.”
The business said it had found itself at a need to sell goods heavily discounted in order to address the inventory levels to adjust to those “adverse market conditions”, but had also found itself in an “overstocked” position on inventory due to the downturn in consumer spending.
It also said that the economic downturn had made it “challenging” for the group to acquire new customers at financially attractive rates, resulting in “higher customer acquisition costs” and that “destabilisation of supply chains resulting in reduced reliability and increased costs”.
The company said that freight costs had leapt from £8.2 million in 2020 to £45.3 million in 2021.