Made.com’s profit warning an indicator of a tough 2022 for home online, says GlobalData

Following today’s (16 May) release of Made.com’s profit warning for its FY2022;

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

“The challenging nature of the furniture market in 2022 has been affirmed by Made.com lowering its guidance on gross sales and adjusted EBITDA for its full year. Its forecast for EBITDA has gone from positive at its 2021 interims in September 2021, to a loss of between £12m to £15m in December 2021 to in the range of -£15m to -£35m today. Gross sales are now forecast to be between flat and -15% from a previous estimate of +40%.

“The retailer has a long history of recording full-year EBITDA losses but its upper guidance is still lower than 2021’s £14.3m loss (though it did record a £1.1m EBITDA profit during its H1 2021 before it was impacted by supply chain disruption with additional £5m in costs in 2022). Its new upper guidance also equates to marginally more than its combined EBITDA losses in its 2019 and 2020 financial years. This news, coupled with a revised and now later target date for recording £1.2bn in gross sales, has caused concern among investors just 11 months after floating, leading to its share price declining double digits in early trading. Since the start of 2022, Made.com’s share price has also declined by 59.6%.

“Online home retailers have had a challenging Q1 2022; Made.com has announced that gross sales during the period was down 10%, and Wayfair’s international sales declined by 31.4% in US dollars. Both businesses remain above pre-pandemic levels but the conditions for the remainder of the year are not set to get any easier. Made.com’s more professional, affluent customer base means it will not be as impacted by the cost-of-living crunch as other retailers, but diverted spend to other categories such as foreign holidays and leisure activities does pose a threat to performance.

“Focusing on homewares will help soften the blow as it encourages more frequent traffic, and the smaller price points resonate with customers. This will not be enough to counterbalance declines in furniture, however, as this category makes up most of its revenue still and shoppers cut back on big-ticket items or reprioritise spend elsewhere. Made.com is not under imminent threat, but the next 12 months will remain challenging.”

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