Made.com to lay off staff as website eyes sale amid poor economic conditions

Sky news - Business

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Interiors website Made.com has announced it is considering being sold as rising costs, tight supply chains, dropping consumer confidence and the need to discount items have resulted in staff lay offs.

The number of staff to lose their job was not disclosed by the London Stock Exchange listed company in a statement on Friday morning, but the Financial Times reported a third of the workforce was to be let go.

Made also let the market know it was open to be purchased, with a London Stock Exchange announcement saying: "One of the options that will be considered in the strategic review is a potential sale of the group."

The company only listed on the stock exchange in June of last year, just 15 months ago, but announced it had been hit by the two headwinds of a decline in discretionary consumer spending and the "destabilisation" of supply chains due to "geopolitical events" and larger economic conditions.

The reasons for that decline in customer spending and confidence were listed as economic slowdowns; inflation; and rising energy prices, stemming from Russia's invasion of Ukraine. There was uncertainty about the duration and possible deterioration of these conditions, the company said.

As a result, Made said there was an "increased need" to sell goods at a discount, which had impacted the company's gross margin.

The global economic problems being felt by Made also meant the company found it "challenging" to acquire new customers at financially attractive rates, which resulted in higher customer acquisition costs.

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The COVID-19 era supply chain woes have persisted through the first half of this year, the company said, due to "structurally higher levels" of freight rates and carrier costs.

The pandemic effects have lingered and caused shipping delays, "market wide reduced freight capacity", and "significantly higher" freight costs.

"Last-mile-delivery costs and additional significant fuel surcharges from carriers, caused by the resulting impact of the Russian invasion of Ukraine on global fossil fuel prices, have contributed to the increased fulfilment costs which has depressed margins", a company announcement read.

In order to improve company finances the board of Made is to conduct a "strategic review" of the group. The review is to look at how the company can raise funding and will look at acquiring more debt to keep going as it said it doesn't think it can raise enough "sufficient" equity from investors.

Made has already attempted to reduce costs by significantly reducing the level of forward purchases, reducing capital spending, implementing a hiring freeze and removing planned spending from marketing activity.

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