Online furniture retailer Made.com has warned it is reviewing its workforce amid efforts to slash costs as a slump in consumer spending is set to send it tumbling to steep losses.
The group said it is looking at its operational structure and headcount, as well as improvements to stock buying and warehousing to try to boost its bottom line by £10 million to £15 million.
Shares slumped by nearly 40% on Tuesday as the firm also revealed it is “considering options” to bolster its balance sheet and finances, which are thought to include raising debt or a possible investor cash call.
It comes as the group said annual losses are likely to be worse than feared, with a 19% plunge in half-year sales set to send it tumbling to an annual underlying loss of between £50 million and £70 million.
We’ve seen a worsening in consumer confidence since May and this has had an impact on this period’s performance
Nicola Thompson, Made.com
In May, it warned it was set to slump to a loss of between £15 million and £35 million, against previous guidance for underlying earnings of up to £15 million, which sent its shares plummeting.
The group said it is being hit by a sharp pullback in demand for so-called big ticket items – such as sofas – as the cost-of-living crisis affects consumer confidence.
It has had to launch cut-price promotions to shift old stock, which has hit profits, while it is also facing extra supply chain costs due to disruption at ports and extra handling at warehouses.
Made.com chief executive Nicola Thompson said: “It’s clear that things are tough for consumers at the moment.
“Understandably, we’ve seen a worsening in consumer confidence since May and this has had an impact on this period’s performance.
“As such, it’s prudent for us to take a conservative view of what we can expect in the second half of this year.”
She added: “To enable us to continue executing on our strategy, we’re taking steps to address the non-strategic costs in the business, as well as considering options to allow us to strengthen the balance sheet sufficiently to navigate what will undoubtedly continue to be challenging conditions.”
The group’s update shows first-half sales dropped 22% year on year in the UK and 15% across Continental Europe.
Orders by number also fell heavily, down 29% in the UK and 21% in Europe.
It now expects gross sales to fall by between 15% to 30% over the full-year, having previously expected an outcome ranging from flat sales to a 15% fall.