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MADE Provides Interim Results Update

MADE lamp
  • A transformation plan for the Company underpinned by Strategic Review and Formal Sale Process

MADE, the leading digitally native lifestyle brand in home, today announces its interim results for the six months to 30 June 2022 and provides an update on actions taken to strengthen the business. Given the Group has seen a reduction in demand driven by the fast changing macro economic climate since Q2 2022 and the consequent financial impacts of an excess inventory position, the Board announced on 19 July that it was looking at all options to strengthen its balance sheet.  On 23 September 2022, the Board announced that it had initiated a Strategic Review and Formal Sale Process ('Strategic Review') as the best route to maximise value for shareholders and to achieve its transformation plan and strategy given the requirement to strengthen the balance sheet within the short time frame required by the cashflow forecast of the Group.

Financial Results Overview

£'m

 

Six months to 30th June 2022

Six months to 30th June 2021

 

Change

 

Constant Currency Change

 

 

 

 

 

 

 

 

Gross Order Value (GOV)(1)

 

173.6

213.9

 

(18.8%)

 

(17.4%)

 

 

 

 

 

 

 

 

Revenue

 

178.2

171.0

 

4.2%

 

6.3%

 

 

 

 

 

 

 

 

Gross Margin

 

40.1%

48.7%

 

(8.6pp)

 

(9.5pp)

 

 

 

 

 

 

 

 

Adjusted EBITDA(2)

 

(31.5)

1.1

 

(32.6)

 

 

Adjusted EBITDA Margin(2)

 

(17.7%)

0.6%

 

(18.3ppt)

 

 

 

 

 

 

 

 

 

 

Loss before tax

 

(35.3)

(10.1)

 

(25.2)

 

 

 

 

 

 

 

 

 

 

Cash

 

32.1

175.3

 

(143.2)

 

 

 

 

 

 

 

 

 

 

Basic EPS

 

(12.9)p

(2.1)p

 

(10.8)p

 

 

1.    Gross Order Value is MADE only, excluding Trouva. Refer to note below titled ''Alternative Performance Measures (APMs)'' defining alternative performance measures (APMs)

2.    Numbers shown are reflective of Group results. Refer to note below titled ''Alternative Performance Measures (APMs)'' defining alternative performance measures (APMs) 

Financial Highlights

  • Softening consumer confidence resulted in Gross Order Value (GOV) decline of -19% period-on-period and +55% compared to H1 2019

  • Revenue of £178m, +4% period-on-period, as deferred revenue normalised through the period

  • The Group took prompt action to clear excess stock through targeted discounting, reducing gross margin by 810bps.  Stock levels have reduced from £63m as at 31 December 2021 to £44m at end of H1 2022 and are now closer aligned with forward demand with further, but more moderated, discounting through Q3 
  • Global freight inflationary pressures decreased gross margin by 730 bps versus H1 2021

  • Robust existing customer order level, with repeat order mix increasing 5ppt to 48% and average order value (AOV) at £266, +9% period-on-period for MADE
  • Adjusted EBITDA of (£31.5m), (vs. £1.1m in H1 2021) due to lower consumer demand resulting in costs related to handling and clearing excess stock levels, and freight cost inflation impacting £17m period-on-period

  • Reported losses before tax were (£35.3m), compared to (£10.1m) for the same period in 2021
  • Cash was £32.1m at the end of the period.  Free cash flow of (£73.0m), compared to £30.4m in the first half of 2021, mainly due to the unwind of working capital.    

Strategic and operational highlights

  • The Group continues its focus on achieving profitability through the implementation of its planned transformation programme, MADE RE:DESIGNED. The first steps, under the RE:SIZE initiatives, have been taken to reduce warehouse and showroom space, with expected annualised cost savings of £7m. A restructuring of headcount commenced on September 15th, aiming to reduce annualised headcount related costs by £6m. Resizing the business is currently expected to incur £3.7m of non-recurring restructuring charges. We are aiming for the majority of the plan to be implemented by the end of 2022 and the financial benefit realised in 2023. 

  • On the 23rd of September, the Board announced that it had engaged with Financial Advisors to actively market the business for sale as a going concern to execute its revised strategy to maximise value for shareholders. The Board expects this process to lead to sufficient investment and access to funding to enable the Group to operate as a going concern.

  • MADE has taken a number of steps since the start of Q2 2022 to adjust to the new level of demand. Stock levels have been reduced allowing a growing proportion of full price GOV. £58m of stock commitments have been rephased or cancelled with our suppliers. Capex was constrained, saving £3m and headcount freezes reduced our annual overhead cost by £3m.

  • Despite the challenging backdrop, MADE has made solid progress on its strategy around Experience, Choice, Reach and Sustainability, during the first half of the year.  

  • The integration of Trouva, a leading online platform that offers a curated range of homewares and lifestyle products, is progressing well, with products from Trouva boutiques now available for MADE customers via a product bridge with the MADE website.
  • Republic of Ireland was relaunched in the period as MADE's ninth market, with an encouraging early response from customers and with structurally attractive contribution margins from launch.

  • MADE's unique designer eco-system continued to develop during the period, with 139 new collections launched into the furniture and lighting proposition and 46 new 'designer maker' brands launched into the curated homewares marketplace during the period.  

Nicola Thompson, Chief Executive Officer, said:

"The first half of the year was a challenging time for the global economy and particularly for the retail sector. The Group has faced a significant reduction in demand which has been difficult for the business and its stakeholders. Although we took immediate action to adjust inventory levels  and control costs and have launched a transformation plan that will make the business more agile and resilient, we believe that the decision we have taken to launch the Strategic Review and Formal Sale Process, is the best route to protect shareholder value. MADE is not alone in being hit by supply chain problems and the cost of living squeeze, but we are confident that MADE has a strong brand, an excellent product range and a large and loyal customer base across the UK and Europe."

Source : MADE

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30 September 2022

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