British online furniture store Made.com collapses
November 9, 2022 07:47 PM
British online furniture store Made.com collapsed Wednesday after it was hammered by supply-chain disruptions and a slump in consumer spending as inflation soared.
UK clothing-to-furniture giant Next said it is to buy the failed group's brand, websites and intellectual property for £3.4 million ($3.9 million).
More than half of the company's staff -- numbering almost 600 -- have already lost their jobs.
Made.com floated less than 18 months ago with a market value of £775 million thanks to soaring demand during the Covid pandemic.
"Having run an extensive process to secure the future of the business, we are deeply disappointed that we have reached this point," chairwoman Susanne Given said in a statement.
It has now formally entered administration, a process whereby an outside body, in this case PricewaterhouseCoopers, seeks to salvage parts of the business.
Consumers slashed expenditure on homes after the lifting of pandemic lockdown restrictions.
They further tightened their belts in the face of rising interest rates and a cost-of-living crisis.
"Made.com has never been a profitable business," noted Interactive Investor analyst Victoria Scholar.
"It somehow managed to convince investors that the pandemic was unrelated to its Covid boom, suggesting that sales would remain strong during the economic reopening and beyond. However that proved not to be the case."
Other experts were scathing over Made.com's fragile business model that was exposed by the supply-chain crunch, particularly after Brexit.
"Using a just-in-time production model and working with over 200 suppliers in the supply chain brings many challenges for even the largest organisations," said Gordon Fletcher, retail specialist at the University of Salford Business School.
In stark contrast, clothing-to-food retail giant Marks and Spencer revealed Wednesday that its sales jumped in the first half of its financial year.
"In the UK, a cost-of-living crisis may be raging, but Marks and Spencer's update shows that plenty of shoppers are still super-resilient and can be persuaded to part with their cash if the (price) offer is right," said Hargreaves Lansdown analyst Susannah Streeter.
Yet M&S warned of a darkening outlook on soaring costs for both businesses and consumers.