Pandemic furniture star Made.com nears collaps

Online furniture retailer Made.com has moved a step closer towards administration after the company’s shares were suspended on Tuesday.

The firm has stopped taking new orders and is running out of cash. Talks to find a buyer have so far failed.

It is dramatic change in fortunes for the brand, which boomed in the pandemic and was valued last year at £775m.

The retailer aims to fulfil orders it has already received but is not offering refunds at this stage.

However, a source told the BBC the situation around refunds could change in the coming days, depending on whether the business appoints administrators or is sold.

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”.

The retailer, which sources directly from designers and manufacturers, gained a loyal base of mostly younger customers and employed 700 staff at the end last year.

It was one of many companies that saw sales surge during the pandemic as people bought more furniture and other products online during lockdown.

Sales at Made.com hit £315m in 2020, then grew by 63% in the first three months of 2021 to £110m. The firm was then listed on the London Stock Exchange.

But more recently the company has hit problems, as households cut back on big-ticket purchases due to the rising cost of living. Global supply chain issues have also left customers waiting months for deliveries.

Made had “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”.

“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.

“I feel both powerless, having stepped down as chief executive in 2017, but also immensely frustrated.”

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.

The move gives the company 10 days of breathing space to find new backers or sell all or part of the business.

Its bosses have warned its cash reserves could run out if fresh funding cannot be raised.

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.

Sophie Drevillon, from South Wales, ordered a range of furniture from Made.com about two weeks ago, ahead of her and her family’s move to Switzerland this week.

Although some items have arrived ahead of the move, the 34-year-old told the BBC she was still without a sofa, media unit and dining table worth nearly £4,000.

When she contacted Made.com about her order, she was told the delivery had been cancelled but she also couldn’t be refunded for the furniture that is yet to arrive.

“I just felt I want my money back, because there’s not point deciding to deliver it in January. It’s no good to me,” she said.

She says she is struggling with the “lack of communication” but has been told by her bank she has no automatic right to a refund.

“I just feel Made need to make a decision… not keep us in limbo,” she said.

“The items are quite key [for our flat]. We are in the process of having to source other items from other companies.”

Made has a shop in Central London which is currently closed. Lauren, who was out shopping with her mother nearby on Tuesday, told the BBC she couldn’t believe the brand might collapse.

“I always browse when I walk past it,” the 24-year-old said. “It’s nice to look at.”

She said she often saw Made’s items being promoted on social media, including by influencers, and that’s how she found out it was on the brink of collapse.

Lauren was shocked the brand hadn’t thrived after lockdown.

“I would have thought it was the opposite because everyone does shop online [these days]. After Covid, I did see people coming here. Everyone would walk in.”

Mr Hoberman said there were “many questions” about how the money raised by Made’s 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.

Source:https://www.bbc.com/