Online retailer Made.com on brink of collapse
Made.com suspends customer orders and terminates formal sales process after failing to secure a buyer.
Online furniture retailer Made.com is close to collapse as it suspends customer orders and terminates its formal sales process (FSP).
The company had been in negotiations with a number of interested parties since announcing the FSP on the 23 September with a final deadline for offers set at the end of October. But in a statement released today, Made’s board has concluded that there is “no reasonable prospect” for a potential buyer.
Made.com, founded in 2010, is known for its design-led home furniture and its innovative “digitally native” model, based around an online store with only a limited number of physical showrooms.
During the Covid-19 pandemic, the business reported “extremely strong” sales, according to Philippe Chaineiux, then-CEO of Made thanks to increased customer confidence in online purchases and the need to set up home offices driving a 200% increase in desk sales for the company. In this period, it launched a virtual apartment for a “see-now-buy-now” experience as part of a plan to “completely rethink” retail as then-CCO Jo Jackson commented at the time.
Following a 30 % increase in sales over the course of the year, in June 2021 the company floated on the stock market with a value of £775m and a flotation price of 200p.
However, despite strong customer demand, problems including factory closures, staffing problems, shipping delays and increased freight costs caused issues in its supply chain according to its trading statement of 6 January 2022. Further problems have been caused by a slowdown in “big ticket” consumer purchases as the cost-of-living crisis worsens.
In its 29 September 2022 update to the London Stock Exchange reporting interim results for the six months to 30 June, a transformation plan for the company was announced “underpinned by strategic review and formal sale process”.
In a statement in the report, Made CEO Nicola Thompson cited a “significant reduction in demand”, in line with the challenges faced across the whole of the retail sector. She added:
“Although we took immediate action to adjust inventory levels and control costs and have launched a transformation plan that will make the business more agile and resilient, we believe that the decision we have taken to launch the Strategic Review and Formal Sale Process, is the best route to protect shareholder value.”
According to the statement released today 27 October: “The board of MADE will continue to look to preserve value for its creditors and shareholders in light of this decision.”
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This news wasn’t a complete surprise to me. The economy was fragile already until the fallout from the mini-budget last month but the signs were already there. Very low mortgage rates for the last decade that were unsustainable, a buy now – pay later culture and also the intense competition from other companies who produce affordable well-designed furniture. Made also had an extremely large number of products on offer. At the last count over 11,500. I did try to order a bed sofa from them one time which was on special offer and then discovered it was made to order with a 12 week lead time as it was shipped from the Far East and this was back in 2017 so not a new situation. I went elsewhere and got a similar product for less with a two-day delivery. But I did buy other products from them that were well-designed. I don’t think they saw this situation coming and who can say what people will cut back on if times get tough?
Also see the Sunday Times business section 30 10 22 which explains that the company changed their business model and ended up with too much stock.