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Pandemic furniture star Made.com nears collapse Pandemic furniture star Made.com nears collapse
(about 2 hours later)
Online furniture retailer Made.com has moved a step closer towards administration after the company's shares were suspended on Tuesday. Online furniture retailer Made.com has moved a step closer towards being wound up after the company's shares were suspended on Tuesday.
The firm announced last week that rescue talks to find a buyer for the business had so far failed. Rescue talks to find a buyer for the business have so far failed and it has stopped taking new orders.
It has stopped taking new orders and bosses have warned cash reserves could run out if further funding cannot be raised. It is dramatic change in fortunes for the firm, which boomed in the pandemic and was valued last year at £775m.
Made.com, which was launched in 2011, employed 700 staff at the end 2021. Its bosses have warned its cash reserves could run out if fresh funding cannot be raised.
During the pandemic, the firm's sales surged as people at home during lockdown bought more furniture and other homeware online. Made.com was set up in 2011 to offer affordable yet "high-end" furniture online and once said it wanted to be the "new Ikea".
But the company has lately hit problems, as households cut back on big-ticket items due to the rising cost of living and global supply chain issues have left customers waiting months for deliveries. The retailer, which sources directly from designers, gained a loyal base of mostly younger customers and employed 700 staff at the end last year.
On Tuesday, Made.com announced that trading in its shares had been suspended. It also said it intended to appoint administrators which means the firm is not in administration but heading towards it. It was one of many companies that saw their sales surge during the pandemic as people at home during lockdown bought more furniture and other products online.
The move gives the company 10 days of breathing space to find new backers or sell all or part of the business, a company source told the BBC. Sales at the business hit £315m in 2020, then grew by 63% in the first three months of 2021 to £110m, which led to Made being listed on the London Stock Exchange.
They added that the retailer's board was still "exploring every option available". 'Wrong time'
In a statement, the firm said it had "received proposals" from interested parties. But the company has hit problems, as households cut back on big-ticket items due to the rising cost of living and global supply chain issues left customers waiting months for deliveries.
However, it said it was likely the company would have to be "wound up" and delisted from the stock exchange before being sold on. Made has also moved away from producing most goods to order and "got caught with massive inventory at just the wrong time", co-founder Brent Hoberman said this weekend.
Mr Hoberman, who no longer runs the retailer but owns shares, said its business model had previously been about "minimal stock and wastage" but had since "morphed into being more similar to other retailers".
Ning Li, another of Made's co-founders, said he believed the brand had "lost sight" of its focus in recent years, saying the "mantra was simplicity"
Furniture website Made.com on brink of collapseFurniture website Made.com on brink of collapse
Made.com shares close lower after £775m placementMade.com shares close lower after £775m placement
A surge in growth led to Made being listed on the London Stock Exchange in June last year at a value of £775m. "My co-founders and I started a fledgling business on a shoestring in Notting Hill, with a simple idea of making high end design accessible to everyone," he added.
Sales at the business hit £315m in 2020, a year-on-year rise of 30%. They then grew by 63% in the first three months of 2021 to £110m. "I feel both powerless, having stepped down as CEO in 2017, but also immensely frustrated."
The business was co-founded by Ning Li and Brent Hoberman, best-known for starting Lastminute.com, as well as Chloe Macintosh and Julien Callède. On Tuesday, Made.com announced that trading in its shares had been suspended. It also said it intended to appoint administrators which means the firm is not in administration but heading towards it.
Ning Li came up with the idea of sourcing directly from designers and manufacturers and selling their furniture on the Made.com website, targeting a computer-savvy audience. The move gives the company 10 days of breathing space to find new backers or sell all or part of the business.
Although Mr Hoberman is no longer actively involved in the running of the company, he is still a shareholder, as is Ning Li, who was chief executive until the end of 2016 and is currently a non-executive director. In a statement, the firm said it had "received proposals" from interested parties. However, it also said it was likely the company would have to be "wound up" and delisted from the stock exchange before any sale could be agreed.
Mr Hoberman said there were "many questions" about how the money raised by its stock exchange listing had been spent and whether enough attention had been paid to "potential risks".
"Cash is always king," he added, alluding to the firm's cashflow issues.
Made is not alone in struggling following the end of lockdown restrictions and the emergence of the cost-of-living crisis.
Online retail sales peaked during the height of the pandemic, and have been on a downward trend since, according to the Office for National Statistics (ONS).
Peloton, which sells exercise bikes and subscriptions to online keep-fit classes, cashed in on the pandemic fitness boom but has seen its shares slump as people return to gyms.
The online retailers Asos, Boohoo and AO World have also seen their shares fall sharply from their pandemic era highs.
Research has suggested more households in Britain are cancelling video streaming subscriptions due to the rising cost of living.
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