The brand of furniture seller Made.com will be bought by the British clothing group Next, the latter announced in a press release on Wednesday 9 November. The three directors of PricewaterhouseCoopers (PwC) chosen to manage the liquidation have reached an agreement with Next, which will also acquire the domain names and intellectual property of Made, for 3.4 million pounds.
PwC says the company had 573 permanent employees, with warehouses in the UK and Belgium, in addition to offices and stores in London, Europe and Vietnam. “Unfortunately the transaction does not take into account the employees and this will result in the dismissal of 320 people”, while 79 other employees, who were already on departure, were also made redundant, according to the PwC press release.
A PwC spokesperson added that 100 non-UK employees will be briefed on their situation in the coming days, while 74 will remain employed by Next to ensure the transition. Administrators should attempt to monetize remaining assets and “payments to creditors will be made according to their statutory priorities”the statement said. “We are deeply disappointed to have come to this” and that this has an impact on “our employees, customers, suppliers and shareholders”commented the president of Made.com, Susanne Given.
IPO in 2021
Made.com, failing to have succeeded in finding new sources of financing, had announced last week its intention to place itself under administration with a view to its liquidation, and the suspension of its action on the London Stock Exchange, which should be soon to be completely delisted. Suffering from falling demand, including from inflation and the global disruption of supply chains, the company warned in September that it was assessing “different strategic options”.
Known for its colorful velvet sofas, the company has suffered a reversal of fortune since its IPO in June 2021. Its market capitalization was then worth some 775 million pounds and its title 200 pence, values gone up in smoke since.
At the end of October, the company which sold its furniture in the United Kingdom, but also in other European countries such as France, Switzerland, Belgium or even Germany, had announced the interruption of its negotiations with potential buyers and a halt to new orders at a subsidiary.
Younger consumer base for Next
With the end of the home decor boom came supply chain issues that dramatically increased delivery times, and a cost-of-living crisis that makes households differ from large purchases, explains Victoria Scholar, Interactive Investor analyst. She notes a trend among major clothing groups like Next and H&M to diversify into furniture and decoration in recent years, and recalls a partnership between Next and the pope of English design Jasper Conran on a collection.
For Next, acquiring Made.com’s consumer base, which is younger than its own, is a long-term opportunity, said Richard Lim, managing director of Retail Economics, interviewed by Agence France-Presse. But the fate of Made.com, which had seen its losses triple over one year in the first half, also illustrates “the glaring difficulties of the sector” distribution, he said.
After the lifting of health restrictions, consumers returned to stores more than expected, showing that the surge in e-commerce was more circumstantial than permanent. Added to this is the cost of living crisis, which has made consumers more careful about spending, all the more so in a context of rising interest rates.
In a general way, “retailers are currently facing a tidal wave of costs”, forcing online stores to charge for deliveries or returns in some cases, Lim said. Sign of the times: the M&S chain of stores was unscrewing on the stock market on Wednesday after announcing a drop in its operating profits, eaten by “pressure on costs and prices”.