Made.com, the online furniture retailer, is facing financial collapse just over a year after an initial public offering that valued it at £775mn.
The group, which sells sofas, bean bags and antique brass lamps to younger shoppers, said in an update to investors on Tuesday that it had failed to find a buyer or secure emergency funding after it launched a “strategic review” looking at options last month.
It warned that if it cannot raise extra funds or secure an offer for the company before its remaining cash reserves are depleted, “the board will take the appropriate steps to preserve value for creditors”.
Made added that it was considering suspending trading in its shares, which crashed 93 per cent on Tuesday to close at just 0.5p a share.
Amid predictions that it could quadruple sales of its upmarket, design-led furniture ranges to £1.2bn by 2025, the group floated in June last year at £2 a share.
Founders Ning Li and Brent Hoberman, along with some of the investors who had backed it as a private company, sold shares worth about £90mn in the IPO, which after expenses raised a similar amount of capital for the company.
But after a series of profit warnings and with its cash reserves dwindling, the group put itself up for sale in September. On Tuesday, it said that all discussions had been terminated because none of the counterparties were able to meet the necessary timetable.
Made has no pre-arranged credit or overdraft facilities and earlier this month told potential lenders and acquirers that if it remained a listed company, it would need interim funding of between £45mn and £70mn in order to see it through to sustainable profitability.
The group was hit by a Covid-related crunch in global supply chains that forced it to largely abandon a capital-light “just in time” business model and hold more stock close to its main markets in Europe.
But that tied up in inventory a substantial portion of the funds raised at the IPO just as consumer confidence began to crumble in the face of soaring food, fuel and energy prices. It was forced to sell furniture at a discount, squeezing its profit margins.
The company hoped to capitalise on a shift to buying online that has been accelerated by the pandemic.
Made also suffered from upheaval in the boardroom, with both its chief executive and chief financial officer leaving the business in 2022.
In July, it warned on profits for a third time and last month began the process of shedding a third of its staff, many of whom had only been hired in the past year.
Last week, Made said it had received several non-binding proposals and had invited “a select number of parties” to submit offers by the end of October.