Made.com Group Plc plans to file for insolvency after the British online furniture store failed to find a rescue buyer and ran out of cash.
The company said Tuesday it intends to appoint PwC as administrator, putting potentially as many as 500 jobs at risk. The London Stock Exchange has suspended Made.com shares from trading.
News of Made.com’s collapse marks a steep decline for a company that only listed last year. It had a valuation of £775 million ($893 million) and was hailed as a millennial favorite. The company’s failure was largely driven by soaring freight costs and supply chain difficulties. Made ranks No. 116 in the 2022 Europe Database, Digital Commerce 360’s rankings of e-retailers in the region by web sales.
Soon after Made.com’s IPO, the business said it was struggling to get stock. It said this was because of longer shipping times and halted manufacturing in Vietnam. Made.com issued three profit warnings this year. Customers grew fed up of long wait times and then demand evaporated with rampant inflation pushing up costs for fuel, energy and food.
Consumer interest in online shopping also fell after the pandemic when people returned to shops and offices and spent less time locked down at home buying furniture on the Internet. Several management departures have compounded the problems at Made.com.
PwC will handle any potential sale of Made.com’s trade, assets or brands.
Brent Hoberman, the creator of travel website Lastminute.com, co-founded Made.com in 2010 in an attempt to offer stylish furniture at cheaper prices by selling directly to consumers and eliminating traditional retailers.
“Made got caught with massive inventory at just the wrong time,” Hoberman said in a LinkedIn post last week. “There are many questions about how the capital raised in the IPO was spent, who was worrying about the potential risks, and how the company had drifted from its initial business model.”
Made.com put itself up for sale in September but failed to find a buyer. It warned last week that it was at risk of running out of cash.
The company has also been beset with management upheaval. The brand’s chief financial officer, Adrian Evans, left in May after CEO Philippe Chainieux stepped down in February, citing family reasons. Nicola Thompson, the company’s chief operating officer, took over as interim CEO. Patrick Lewis, most recently CFO at John Lewis Partnership Plc, replaced Evans as finance chief.
In some ways, Made.com’s decline is symptomatic of problems facing other furniture retailers, especially those relying on an online presence. Wayfair Inc., the United States home goods seller, announced it was cutting 5% of its workforce in August to save costs. John Lewis has seen customers move away from dining room furniture, and Next Plc has noted higher freight costs on furniture due to its big, bulky nature versus clothing.
Made.com is also in part a victim of appetite drying up in credit markets with borrowing costs soaring to the highest in many years. The retailer said in September that as part of its strategic review, it was considering debt financing, taking on a business partner or a complete sale or merger. Ultimately, none of these avenues proved viable.
Stay on top of the latest developments in the ecommerce industry. Sign up for a complimentary subscription to Digital Commerce 360 Retail News.