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MADE Revises Outlook; Appoints New CFO

MADE lamp

Made.com, the leading digital lifestyle brand for the home, today announces a trading update and revised guidance. The Group continues to execute its strategy and remains very confident it will achieve significant outperformance against the online furniture and home market. This builds on the achievements year-to-date, during which the company has outperformed the market by at least 20 percentage points.  Customers are reacting positively to the improved proposition with average lead times consistently at the targeted 3-4 weeks average for the last two months, leading to ongoing improvements in customer feedback and growing repeat order mix (47% for Q1 2022 vs 43% for Q1 2021). 

Although MADE's performance has remained strong versus pre-pandemic levels, trading has been volatile in recent months and more challenging than anticipated at the start of the year.  Third-party data suggests that the online furniture and home market is down around 30-40% so far this year. Compared to the market, MADE gross sales were down only 10% in Q1 vs Q1 2021 (and up 64% vs 2019).  

Based on the most recent trading we are updating expectations for the full year.  We now assume the market will remain highly challenging for the rest of 2022 despite the significantly easier comps for H2.  We remain very confident that MADE will continue to outperform the online home and furniture market by at least 20 percentage points.  Spot freight rates continue to normalise in line with previous expectations, but lower sales mean the benefit will be reflected in gross margin later in 2022 than previously anticipated.  We still expect 2022 exit rate gross margin to be around pre-pandemic levels and business shape will be set for the new operating environment. These actions will position the business to deliver positive adjusted EBITDA and free cash flow in 2023.  The revised guidance range is as follows: 

 

2022 Guidance Lower

2022 Guidance Upper

Gross sales

-15%

0%

Net revenue

-7%

8%

Adjusted EBITDA

£-35m

£-15m

Capex and Trouva acquisition

£13-18m

£13-18m

NWC/Net revenue

-11%

-11%

Year-end 2022 net cash

£40-45m

£60-65m

Adjusted EBITDA includes one-time costs relating to supply chain disruption of £5m. Working capital will be higher than planned at the end of the first half, reflecting improved lead times and weaker market demand, but significant adjustments already taken will materially reduce order intake for H2.  The composition of inventory is good, and the Group does not anticipate higher mark-down risk for the second half of 2022.

With a much weaker market backdrop for 2022, we now expect to achieve £1.2b of gross sales later than 2025.  The Board remains very confident in the long-term value drivers of the business.

  • MADE operates in a highly fragmented market, that is shifting online, with significant further market share opportunities
  • Growing and loyal customer base, with improving repeat order mix and drivers in place to improve lifetime value given better Choice and Experience
  • Attractive operating model, which is data led and has low capex requirement; and
  • Strengthening competitive advantages of the business, with our designer ecosystem and enhanced range, boosted by the acquisition of Trouva

Nicola Thompson, Chief Executive Officer, said, 

"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. 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."

CFO Appointment

Made.com Group Plc, the leading digital native lifestyle brand in home, today announces the appointment of Patrick Lewis as Chief Financial Officer of the Group with effect from 27 June 2022.

Patrick will join the Board and help lead the next phase of the Group's growth and development, succeeding Adrian Evans. Adrian, who joined MADE in 2017, will step down from the Board on 27 June 2022, remaining with the company until 16 September 2022 to ensure a smooth transition of responsibilities, before pursuing other opportunities.

Patrick has spent much of his career in leadership roles on the John Lewis Partnership Board, most recently as Chief Financial Officer.  As part of this role, Patrick led a supply chain improvement programme and built strong relationships with key stakeholders in restructuring the John Lewis Partnership balance sheet.  Patrick gained valuable insight into high growth eCommerce while a Non-Executive Director at Ocado Group Plc.

Susanne Given, Chair of Made.com said:

"On behalf of the Board and the whole company I would like to thank Adrian for his work over the last five years. Adrian's calm professionalism and dedication were enormously important to the growth of the company, and he has played a key role in shaping strategy, driving growth and helping the company transition to a public company.

"As we look forward, I am delighted to welcome Patrick to the team. His extensive retail and digital experience will be a great asset to MADE as we continue to grow the business."

Adrian Evans said:

"I am pleased to have been part of the management team at MADE during such an interesting and exciting time. The company has a strong balance sheet and a clear strategy which it is successfully executing, despite current macro headwinds. I would like to wish my colleagues all the best for the future and I look forward to MADE's continuing success."

Patrick Lewis said:

"I am delighted to be joining MADE, a company I have admired and watched with great interest. I am very much looking forward to working with CEO Nicola Thompson and the wider team as we continue to deliver against the company's strong strategy."

Patrick Lewis is currently a Non-Executive Director of Sanderson Design Group Plc. There is no further information in respect of Patrick Lewis which requires disclosure under Listing Rule 9.6.13. The information required to be disclosed under section 430(2B) of the Companies Act 2006 in relation to Adrian Evans and details regarding the remuneration package for Patrick Lewis will be available on the Group's website in due course.

Source : MADE.com PLC Group

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16 May 2022

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