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Britain’s Made.com is cutting jobs and mulling options including a sale as the online furniture retailer struggles with a steep fall in consumer spending and supply chain snags that have raised costs, it said on Friday, September 23.
Shares in the company, which made its London market debut only 15 months ago, tumbled 30% to 3.6 pence. They have lost more than 98% of their value since their initial public offering (IPO) that was priced at 200 pence per share.
British consumers have been struggling with a worsening cost-of-living crisis as prices of everything from food to fuel have increased and put a strain on their disposable income, prompting them to cut back on non-essential purchases such as furniture.
Made.com will cut costs by laying off staff in the next few weeks, it said in a statement, while it reviews options including a formal sale process and strategic investments.
It did not immediately disclose the number of employees that would be laid off.
An FT report late on Thursday, September 22, said some 35% of the group’s workforce was likely to go. Made.com employs around 700 people, indicating more than 200 jobs could be cut.
The company, which was spending heavily on advertising and whose strategy was to build up inventory to get products out sooner, said it has had to sell goods at a discount to slash its stock, which has hurt margins and its cash position.
Market conditions have changed “radically” since its IPO, it said, and have stymied its plans for a possible capital raising from market investors.
In the past year, supply chain disruptions, made worse by Russia’s invasion of Ukraine, have also pushed up costs for companies, including Made.com.
It also withdrew its full-year forecast on Friday. It had warned in July of bigger losses this year, saying it did not expect an improvement in demand for big-ticket items any time soon.
Made.com appointed PricewaterhouseCoopers as its financial adviser to the strategic review and formal sale process.
British retailer DFS Furniture last week also warned of a challenging outlook for the furniture sector, saying volumes have fallen as demand wanes. – Rappler.com