Made.com warned that profits would remain under pressure after its losses doubled last year as the British online furniture retailer grappled with global supply chain disruption and rising production costs. transport.
The furniture sector has been one of the hardest hit by high transport cost inflation, as many of its large, bulky items – or the raw materials from which they are made – come from China and elsewhere in Asia.
Made, which targets design-conscious millennials, listed in London last June. His market value has since dropped from £775m to £285m. Its shares were up more than 6% by lunchtime Tuesday.
The company also announced that it had named interim chief executive Nicola Thompson as its full-time boss, less than three weeks after Philippe Chainieux resigned for family reasons. Thompson previously served as chief operating officer.
Delivery delays caused by supply chain issues have weighed on Made’s revenue, as payments are not recognized until the furniture is delivered to the customer. The company said around £56m of sales were pushed back from the previous financial year to the current financial year, compared to a previous estimate of £45m.
Transportation costs increased more than fivefold in the year to December 31, compressing gross margins. Pre-tax losses fell from £14.6m in 2020 to £31.4m, worse than consensus forecast for a loss of £24m.
Adrian Evans, Chief Financial Officer of Made, said: “There has been a very significant movement in transport costs throughout the year, we have managed this very well and we have flexibility through the model. This has prepared us well to ensure that the gross margin is in line with the medium-term forecast. »
Still, Made pointed to “weak consumer demand” and said earnings before interest, tax, depreciation and amortization would be between £5m and £15m in 2022, down from around £17m.
Despite a weaker-than-expected outlook, the company said it remained on track to meet its forecast of £1.2 billion in gross sales for 2025.
Wayne Brown, an analyst at house broker Liberum, pointed out that Made’s revenue of £371m for 2021 was 80% higher than before the coronavirus pandemic.
Compared to rivals such as DFS, Made had “absolutely taken market share,” Brown said, adding that while the company had “cut its growth forecast a little bit,” its medium-term goals remained unchanged.
Made said it has expanded its warehousing facilities to meet growing customer demand and plans to sell more products in stock rather than making them to order.
This will reduce average lead times to around three or four weeks by the end of the first half, from seven to eight weeks during the pandemic, but will tie up more cash in inventory.
“We’re on track to reduce our turnaround time,” Thompson said. “We will naturally take more sales from stock. Previously 60% of sales came from stock that was not on hand, now it is 60% of stock on hand.