Made.com considering potential capital raise

Furniture retailer Made.com confirmed on Thursday that it is considering a potential equity capital raise.

Responding to recent press speculation, the company said: "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."

At 1040 BST, the shares were down 10% at 8.85p.

AJ Bell financial analyst Danni Hewson said: "Turns out that selling on-trend but relatively pricey furniture is not a great model in the current economic environment.

"Online furniture retailer Made.com looks like it is being forced to pursue an emergency fundraise, which had been euphemistically hinted at in a statement a month ago when it said it was ‘exploring ways to strengthen its financial position’.

"Investors have seen the shares lose more than 90% of their value and may be reluctant to put good money after bad, although if they want to protect some continuing value in their investment they may have little choice.

"There is clear evidence that the scale of the pressures on household budgets is preventing people from buying big-ticket items like a new sofa.

"In different times Made.com might have been a decent proposition, and it has continued to win market share, but now it faces a desperate scramble to reduce costs in order to keep the lights on.

"Made.com needs to sort out inventory issues - effectively clearing out excess stock by selling at a discount - and hope this doesn’t undermine the brand and make it difficult to sell at full price in the future.

"The company has to make sure it gets the basics of retail - holding the right amount of stock while still having what customers want, when they want it - spot on in the future as it is likely to have very little margin for error."