A view of the Made.com store on Main Street in central London on October 28, 2022 in London, England.

Chris J Ratcliffe | Getty Images News | Getty Images

LONDON – Millennial furniture retailer Made.com on Tuesday suspended its shares on the London Stock Exchange, after it failed to agree on a bailout deal before the November deadline.

The troubled company, which halted new customer orders on October 26, also filed a notice of its intent to hire directors from PricewaterhouseCoopers.

Made now has a 10-day period when it is shielded from creditor action, during which it plans to enter into final talks with the hope of agreeing to a full or partial sale before bringing in those responsible.

In its notice, it said it had received proposals to acquire some or all of its business assets, assets and trademarks, but could not guarantee the completeness of those offers.

She also said the board currently expects to cancel Made shares, with any remaining value distributed to shareholders.

It was listed on the London Stock Exchange in June 2021 at a price of 1.99 pounds per share, valuing the company at 775 million pounds ($893 million), after it saw bumper sales boosted by people who renovated their homes during the coronavirus pandemic.

But its share price has been in steady decline since its initial public offering, which accelerated amid the risk-off environment in 2022 that hit tech stocks.

Its shares were at 20 pence in July, when the company cut its revenue and profit forecast for the third time in a year, and at the time of comment on Tuesday it was worth less than a penny.

Made.com is best known for its collection of vintage-inspired, brightly colored Scandinavian furniture, with pieces like velvet sofas being shared widely on Instagram, helped by influencer marketing.

However, customers have also grumbled about long delivery times for some items, particularly as global supply chain issues intensify in 2021.

It reported revenue of £372m in 2021, up 50% from the previous year, but its EBITDA (earnings before interest, tax, depreciation and amortization) loss expanded from £2.9m to £18.3m.

It also considered bringing in shareholders for additional funding before announcing it would seek a buyer or emergency investment in September, saying the terms “are not currently supportive of raising sufficient equity from public market investors.”

At the time, it also said it would look to lay off a number of its 700-strong workforce, which the Financial Times estimated would be as much as 30%.

Difficult conditions

“Customers are turning away from higher-priced items,” said Sophie Lund Yates, senior equity analyst at financial services firm Hargreaves Lansdown. “When the cost of living becomes unbearable, expensive furniture purchases get delayed, and that’s exactly the pattern we’ve seen play out at Made.com.”

UK retail sales data for September showed shoppers cut back on purchases of items such as TVs, computers and furniture, but boosted sales of energy-saving appliances such as air fryers, which the British Retail Consortium attributed to waning consumer confidence.

Despite the government support package, energy bills will be higher for most households this winter, and year-on-year inflation is above 10%.

“The financial concerns that raised their heads as orders slowed were just one part of the group’s demise. The second is its inability to secure an external bailout, which is a direct consequence of the current inflationary environment,” added Lund Yates.

“It is well known that the discretionary consumer is one area of ​​the economy that will suffer for some time now, which has hampered Made’s ability to attract an offer,” she said.

Other Internet No. 1 companies that were listed in London in 2021 in the wake of the pandemic growth have also suffered a drop in stock value, including Deliveroodown 55% this year, the retailer THGdown 71%.

change direction

Made was founded in 2010 by Ning Li, a Chinese-born entrepreneur based in Paris who also founded the botanical skincare brand. and British investor Brent Huberman, founder of Lastminute.com.

The concept, which they outlined in previous interviews, was to commission furniture and home accessories design, market them through the Made website, and manufacture only when an order is placed, with shipping directly to customers’ homes requiring minimal storage.

Hoberman, who has since left Made and is not on its board but remains a shareholder, told CNBC in an interview that aired in October: “The company went public, and there was Covid, which means there’s a lot of demand, and they’ve been doing it.” Well. They thought this was a structural shift, I think, and it will continue.”

“Covid is coming, recession is coming, interest rates are coming in, supply chain disruption that we all know about. So a lot of externalities, really tough. So, they haven’t been so lucky,” he said.

“But they raised £100m in the IPO…and it looks like they spent most of that on the purchase [product] Which is a diversion from the initial business model which I thought was unfortunate.”

Huberman said he believed Mead had fallen into the trap of missing its mark after being sold, and had come under pressure from the market to continue high growth levels.

“If the lead times are too long, you need to buy more shares and squeeze that, which got them into trouble,” he added.

Lee resigned as CEO in 2017 and last week said on LinkedIn: “12 years ago, my co-founders and I started a new business in full swing in Notting Hill, with the simple idea of ​​making cutting-edge design accessible to all. The idea became a company with a value £430m in sales last year.”

“The tagline was simplicity – because it means value to our customers and cost effectiveness to the business. From where I sit today, I think the brand has lost that focus in recent years, and as a result, it has lost ground.”

The company is currently led by Nicola Thompson, former head of global customer development at fashion retailer ASOS.

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