Made.com plans to cut a third of staff as it seeks buyer or investment
Made.com is seeking a buyer or emergency investment as the embattled online furniture retailer plans to shed more than a third of staff to stretch its dwindling cash reserves.
The company, which in July warned of job cuts as increasingly cash-strapped consumers stopped spending on “big-ticket” items, has withdrawn full-year guidance as sales plummet.
Made.com employed 673 staff on average last year, including more than 320 in marketing and products and 290 in administration roles, and instituted a hiring freeze as the beginning of the year.
It is seeking to make 35% of employees redundant – more than 200 people – by the end of next month.
The company, which floated on the London Stock Exchange last year, had considered turning to the markets to raise more funds, but now says the dire conditions are “not supportive at the current time of raising sufficient equity from public market investors”.
It is undertaking a strategic review looking at options including debt financing, finding a strategic investor, a sale of the company or a merger with another business.
“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,” said the company, which has appointed PwC to handle the strategic review and sale process.
Shares in Made.com, which has issued three profit warnings this year, have slumped by 98% to only 4p since its flotation in June 2021. Its market value has plunged from £775m to £15m.
“When Made.com joined the stock market, no one would have thought the business would have been put up for sale 15 months later after a disastrous trading period,” said Russ Mould, investment director at stockbroker AJ Bell.
“It floated at a time when people were sprucing up their homes having spent so much time indoors during the various lockdowns. But Made.com quickly became unstuck thanks to supply-chain problems with customers waiting months for their sofas to be delivered, leading to cancellations and frustration.
“Then the cost of living crisis bit and big-ticket items like a new three-piece were put on the backburner, all contributing to a severe slump in Made.com’s share price and a slew of profit warnings.”
Since the start of the year, the London-based company has implemented measures to attempt to preserve its finances, including limiting forward purchasing of inventory, implementing a hiring freeze, halting marketing spend and reducing capital expenditure.
“In order to extend the group’s cash runway further, the board has concluded that costs must be reduced further and a process has commenced to implement additional cost reductions, including a strategic headcount review, within the next few weeks,” Made.com said.
The company is also consolidating its supply chain in Europe and Vietnam, closing its operations in China, and reducing its warehouse capacity because of lower levels of consumer demand. Customer service will be outsourced to a third party.
“Whatever happens, it looks like existing shareholders may be wiped out or be left with a mere fraction of their original investment,” Mould said.