Made.com shares dive as furniture retailer considers equity capital raise to bolster its struggling balance sheet
- Made.com has confirmed it is considering a potential equity capital raise
- The group has seen its share price slump over 90% in the past year
Online furniture retailer Made.com is on a mission to shore up its balance sheet and has confirmed it could launch a cash call to raise much-needed capital.
The UK-based company told investors on Thursday it was ‘considering all options’ to help bolster its bottom line amid dwindling sales and plummeting shopper sentiment.
Made.com shares dropped sharply today and were down 7.69 per cent or 0.76p to 9.12p in early morning trading. The group’s share price has slumped over 90 per cent in the past year.
Troubled times: Made.com has confirmed a cash call could be on the cards
While the initiation of an equity capital raise is not understood to be imminent, it is likely to take the form of a placing which would require shareholder approval.
In a brief stock market statement, Made.com, said today: ‘Further to the Q2 trading update published on 19 July 2022, MADE notes the recent press speculation regarding the possibility of the Group undertaking a capital raise.
‘As indicated in the Q2 trading update, MADE is considering all options to allow it to strengthen its balance sheet. MADE confirms that these options include a potential equity capital raise. MADE continues to consider its options and a further announcement will be made if and when appropriate.’
According to Sky News, Made.com has appointed PricewaterhouseCoopers to examine cost-cutting and other restructuring options. Job cuts totalling around 600 could also be on the cards in future, the report added.
In July, Made.com slashed its sales and earnings guidance for 2022, stating it did not expect an improvement in demand for big-ticket items any time soon.
Wages are failing to keep pace with inflation, which hit a more than 40-year high of 10.1 per cent in July.
Made.com said its gross sales fell 19 per cent in the first half of 2022 year-on-year.
Reflecting recent non-recurring costs, volatile trading and an expectation of no near-term improvement in discretionary big-ticket demand nor in new customer acquisition, the group forecast a 15 per cent to 30 per cent fall in full year gross sales.
It also forecast a core loss of £50million to £70million, against a previous expectation of a loss of £15million to £35million.
Made.com was founded by Brent Hoberman, former Lastminute.com co-founder, and Ning Li, a Chinese entrepreneur, and went public in London last year with a valuation of £775million. The group’s market capitalisation is currently around £38million.