Pandemic furniture star Made.com nears collapseon November 1, 2022 at 11:59 am

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

The firm, which has stopped taking new orders, has run out of cash and 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, 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 their sales surge during the pandemic as people at home during lockdown bought more furniture and other products online.

Sales at Made.com hit £315m in 2020, then grew by 63% in the first three months of 2021 to £110m, which led to the firm being 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 and global supply chain issues have left customers waiting months for deliveries.

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”.

“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 CEO 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.

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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