Yahoo Finance Made.com shares crash to lowest ever after profit warning
Shares in retailer Made.com (MADE.L) fell as much as 22% to record lows on Monday, before recovering to trade 10% lower, after it slashed its sales forecasts and issued a profit warning.
The company, which sells furniture, kitchen equipment and other household goods online, warned that the market was much weaker than forecast.
It said that trading had been “volatile in recent months and more challenging than anticipated at the start of the year”.
It now expects gross sales to fall by up to 15% this year, with adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) to come in at a loss of between £15m ($18m) and £35m.
In March, it forecast gross sales growth of between 15% and 25%, and positive adjusted EBITDA between £5m and £15m, on the assumption that global supply chain disruptions normalise.
Analysts at Liberum said the outlook was "well below" what they were expecting, though they said the firm was performing better than its rivals.
The stock, which has lost almost three-quarters of its value since floating at 200p in June 2021, plummeted on the back of the news.
“There is no escaping the tough trading environment at the moment. However, we are laser-focused on executing our strategy and we are delivering strong progress across each of our strategic pillars,” Nicola Thompson, chief executive, said.
“Our customers are at the heart of our business and we’re seeing a really positive reaction to our improved proposition, with average lead times consistently at the targeted 3-4 weeks average for the last two months.
“Made continues to outperform the online furniture and home market and I am confident the company will emerge in a very strong position.”
It comes as the company’s finance chief Adrian Evans is stepping down next month, to be replaced by Patrick Lewis, the great grandson of the founder of John Lewis.
“Investors don’t care that sofa seller Made.com is outperforming the market given the whole sector is experiencing a sharp decline in trading thanks to the cost of living crisis,” Russ Mould, investment director at AJ Bell, said.
Read more: Greggs warns of price hikes as cost pressures rise
“As far as investors are concerned, Made.com’s earnings expectations have been sharply downgraded which means the stock is far less appealing to own, hence the big share price slump on the news.”
He added: “Big ticket items are the first things consumers will delay when the going gets tough, as the idea of shelling out £1,000 or more on a sofa seems excessive when the cost of energy, food, drink and more is racing ahead.
“Households will have to make their current sofa last a bit longer, and the same applies to other expensive purchases such as electronic goods unless they’re broken and desperately need replacing.
“Made.com’s profit warning coincides with the appointment of new finance boss Patrick Lewis who now has the perfect excuse to have a good look through the cupboards and further reset expectations once he starts next month.
