Troubled online retailer Made bowed to financial pressures and went on sale in the midst of a severe downturn in the home furnishings market as consumers facing the cost of living crisis cut back on large items.
Shares in the sector tumbled nearly 30% in morning trading.
The group, originally founded by former Lastminute boss Brent Hoberman and investor Ning Li, reported that it hit the rocks last month as it sought an 11th-hour cash injection from investors to support its balance sheet. Hoberman and Li have since left the business.
Made said: “Although the group has had a number of strategic discussions with stakeholders, the group has not received any approaches or discussions with any potential bidders at the time of this announcement,” but has now reached the decision that one of the options for his future was to enter a “formal sales process”.
Nicola Thompson, Head of Made, said: “Made is not the only one affected by supply chain problems and cost of living squeeze, but we are taking action to ensure our continued success, supported by our strong brand. , an excellent range of products and a large and loyal customer base in multiple markets. “
Shares in the group have dropped nearly 95% in value over the past year with the group hiring PwC consultants to explore a restructuring of the group and implement potential cost reductions, including layoffs.
At the time, the retailer said it would “consider all options to strengthen its balance sheet.”
Made said: “The first hurdle is the decline in discretionary consumer spending resulting from rising inflation and a sharp decline in consumer confidence.
“During the first half of 2022, Made’s core markets experienced negative developments in macroeconomic conditions, including economic slowdowns, rising commodity and energy price inflation, driven by the Russian invasion of Ukraine, which caused greater uncertainty about the duration and further deterioration of these adverse conditions and other contributing factors.
“These adverse market conditions have caused a sharp drop in consumer confidence and contributed to a significant withdrawal of consumer discretionary spending.”
The company said it found it needed to sell heavily discounted goods to cope with inventory levels to accommodate those “adverse market conditions”, but it also found itself in an “over-stock” position due to inventory levels. of the decline in consumer spending.
He also stated that the economic downturn has made it “difficult” for the group to acquire new customers at financially attractive rates, resulting in “higher customer acquisition costs” and that “the destabilization of supply chains resulting in reduced reliability and cost increase “.
The company said transport costs went from £ 8.2 million in 2020 to £ 45.3 million in 2021.