Following the news that sales talks for Made.com with potential bidders have been terminated;

Matt Walton, Senior Data Analyst at GlobalData, a leading data and analytics company, offers his view:

“Not since Bunnings’ disastrous acquisition of Homebase in 2016 has a retailer risen and fallen as quickly as Made.com which was once seen as the future of furniture. The company has gone from going public in June 2021 to teetering on the edge of administration 16 months later after talks to sell the business collapsed on Tuesday. The pureplay has been caught in a pincer movement of furniture shoppers returning to stores, the cost-of-living crisis discouraging shoppers from making larger ticket purchases and its core customer base of young professionals spending more on leisure and experiences.

“Made.com was on course to record an EBITDA loss of between £50-70 million. This was due in part to its decision to build up inventory in response to supply chain disruption. However, when demand did not meet its expectations, this left the company with stock that had to be discounted heavily in order to be shifted. With its cash position going from £107.2 million on the 1st January to £32.1 million at the end of June, it’s tough to see how the company could last the year.

“Made.com is likely to follow the same fate as Eve Sleep in being acquired out of administration in a pre-pack deal as its brand still resonates with customers especially in the South. Private equity group Sun Capital is likely to consider it, having had experience of the UK furniture market after supporting both Dreams and ScS. Another name likely to consider it would be Frasers Group, which already owns Sofa.com and would offer it another more premium brand for its House of Fraser stores.

“If bought and run as a stand-alone business, one challenge it must overcome is recalibrating the balancing act between marketing spend and maintaining awareness. Currently its UK marketing costs account for 13% of its UK revenue, largely due to its very limited physical presence and needing to constantly promote itself to maintain front-of-mind with shoppers. Despite this spend, it still trails many of the leading specialists within the market for awareness. Its next owner must devise a way to build its brand while reducing its advertising spend.”