MADE Revises Guidance Amid Volatile Trading

• Strategic progress in a challenging macroeconomic environment 

MADE, the leading digital native lifestyle brand for the home, today announces a trading update and revised guidance.  Recent trading has been volatile, and the worsening of consumer confidence has impacted demand for discretionary big-ticket items, making new customer acquisition at financially attractive rates challenging. Group gross sales for H1 2022 were -19% vs last year and +55% vs H1 2019.  

Despite the volatile macro backdrop, the Group has made strong 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 and the Group has pulled forward its re-entry into Ireland with encouraging early trading.  

Profitability in 2022 is expected to be adversely impacted by c.£20m of non-recurring costs primarily in two areas.  Firstly, additional promotional and clearance activity related to excess inventory in the business, following the strategic inventory build set out in our prospectus last year.  Secondly, additional costs in the supply chain due to disruptions at ports and extra handling at warehouses.  Both items primarily impacted the first half and are expected to substantially normalise in the second half as a result of reductions in inventory levels.  

The Management Team is actively addressing all non-strategic fixed costs across the business to enable the return to attractive unit economics and ensure the business operating model is flexible for the new environment and better positioned to deliver the long-term strategic goals. Areas of focus include looking at forward stock buying, warehousing and sourcing markets, and reviewing our operational structure and headcount. Through a combination of these actions, the Management Team is targeting an annualised P&L benefit of £10-15m, however, with minimal P&L benefit expected in FY2022.  Alongside these cost actions, Management is considering options to allow the Company to strengthen its balance sheet.  

H1 trading impacted by worsening consumer sentiment despite strong execution of strategic priorities 

• Gross sales trends have been consistent across both the UK and Europe compared to H1 2021.  Against 2019, H1 gross sales growth for the UK was 45% and Continental Europe achieved 67%.  H1 constant currency growth was 58% versus H1 2019.
  
  
• Customer metrics versus H1 2021 show -5% growth in active customers; repeat order mix +541bps to 48% and average order value up 9% period-on-period.
  
  
• Homewares continues to increase in the sales mix, now increased by 2ppt to 30% for H1 compared to prior year and by 8ppt compared to 2019 as the ongoing range expansion and improved choice is well received by our customers.
  
  
• Gross margin, as expected, has been adversely impacted during the period.  Inventory levels have now been corrected and as such mark down levels are expected to normalise through the course of H2.  Inflation costs in the supply chain continue at elevated levels, with freight costs remaining higher than expected and the recent implementation of significant fuel surcharges from carriers.
  
  
• The Trouva integration is progressing well and the first products are expected on the Made.com curated marketplace before the end of September, with over 2,500 products to be made available by end of the year.
  
  
• Customers have responded well to the much-improved customer experience, with NPS* back at pre-covid levels.
  
  
• Ireland has been relaunched as our ninth market, with an encouraging early response from consumers and with structurally attractive contribution margins from launch.
  
  
• Unaudited net cash at 30 June 2022 was £31.5m, reflecting high levels of investment in inventory.

*internal NPS measure

Updated guidance

Based on recent non-recurring costs, volatile trading and ongoing expectation for no near-term improvement in discretionary big-ticket demand nor in new customer acquisition, we are updating expectations for the full year.  The revised guidance range is as follows:  

Nicola Thompson, Chief Executive Officer of Made.com, said,  

"It's clear that things are tough for consumers at the moment. Understandably, we've seen a worsening in consumer confidence since May and this has had an impact on this period's performance. As such it's prudent for us to take a conservative view of what we can expect in the second half of this year.   

"It's thanks to the hard work and determination of our team at MADE that we've made strong strategic progress over this period, despite the challenging macroeconomics. Looking at our performance over recent years, we have managed to grow the business by 57% since 2019, our last undisrupted year, and increased our market share. To enable us to continue executing on our strategy we're taking steps to address the non-strategic costs in the business, as well as considering options to allow us to strengthen the balance sheet sufficiently to navigate what will undoubtedly continue to be challenging conditions. We're confident that this will put us in a strong position for the coming years."

MADE presents key gross sales performance metrics relating to the first half of 2022 below:

Source : MADE.com

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