Made.com Group Plc plans to file for insolvency after the British online furniture store failed to find a rescue buyer and ran out of cash.
(Bloomberg) —
Made.com Group Plc plans to file for insolvency after the British online furniture store failed to find a rescue buyer and ran out of cash.
The company said Tuesday it intends to appoint PwC as administrator putting potentially as many as 500 jobs at risk. Shares of Made.com have been suspended from trading on the London Stock Exchange.
News of Made.com’s collapse marks a steep decline for a company which only listed last year with a valuation of £775 million ($893 million) and was hailed as a millennial favorite. The company’s failure was largely driven by soaring freight costs and supply chain difficulties.
Soon after Made.com’s IPO, the business said it was struggling to get stock due to longer shipping times and manufacturing in Vietnam being halted. Made.com issued three profit warnings this year as customers grew fed up of long wait times and then demand evaporated with rampant inflation pushing up costs for fuel, energy and food.
Consumer interest in online shopping also fell after the pandemic when people returned to shops and offices and spent less time locked down at home buying furniture on the Internet. Several management departures have compounded the problems at Made.com with the shares slumping more than 99% this year.
PwC will handle any potential sale of Made.com’s trade, assets or brands though there can be no certainty of any deal. The company is expected to be wound up and it’s unclear yet whether any value will be left for shareholders, suppliers and creditors.
Inventory Overload
Brent Hoberman, the creator of travel website Lastminute.com, co-founded Made.com in 2010 in an attempt to offer stylish furniture at cheaper prices by selling directly to consumers and eliminating traditional retailers.
“Made got caught with massive inventory at just the wrong time,” Hoberman said in a LinkedIn post last week. “There are many questions about how the capital raised in the IPO was spent, who was worrying about the potential risks, and how the company had drifted from its initial business model.”
Made.com put itself up for sale in September but failed to find a buyer and warned last week that it was at risk of running out of cash.
The company has also been beset with management upheaval with the brand’s chief financial officer, Adrian Evans, leaving in May after Chief Executive Officer Philippe Chainieux stepped down in February, citing family reasons. Nicola Thompson, the company’s chief operating officer, took over as interim CEO while Patrick Lewis, most recently CFO at John Lewis Partnership Plc, replaced Evans as finance chief.
Waning Demand
In some ways Made.com’s decline is symptomatic of problems facing other furniture retailers, especially those relying on an online presence. Wayfair Inc., the US seller of home goods, announced it was cutting 5% of its workforce in August to save costs. John Lewis has seen customers move away from dining room furniture and Next Plc has noted higher freight costs on furniture due to its big, bulky nature versus clothing.
Made.com is also in part a victim of appetite drying up in credit markets with borrowing costs soaring to the highest in many years. The retailer said in September that as part of its strategic review it was considering debt financing, taking on a business partner or a complete sale or merger. Ultimately, none of these avenues proved viable.
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