- Reports suggest company is looking to raise £50 million
- Statement confirms it is considering placing shares
- Analyst says headlines around solvency ‘a nightmare’
Online furniture retailer Made.com's (MADE) miserable time as a public company continues as the company effectively confirmed it was planning an emergency fundraising in a brief statement.
According to Sky News reports, the firm has brought in advisors from PwC to help prepare a share sale to raise around £50 million.
Chief executive Nicola Thompson had indicated in a second quarter trading update on 19 July that the company was ‘considering options to allow us to strengthen the balance sheet sufficiently to navigate what will undoubtedly continue to be challenging conditions’.
Today's 9.4% fall to 8.95p extends the loss on the June 2021 issue price of 200p to more than 95% making a dilutive share placing all the harder for investors to swallow.
However, the difficult economic backdrop may leave them with little choice if they want to maintain any value for their investment.
Data from MarketScreener suggests the three largest shareholders are Level Equity Management, Partech Partners and Haka Investments, while Liontrust Portfolio Management has a 4.95% stake.
‘SOLVENCY NIGHTMARE’
Shore Capital analyst Clive Black commented: ‘The group has undoubtedly suffered from the sell-off of pure-play retail stocks, many of which were over-hyped as to the reality of the potency and sustainability, and so equity value, of the online channel amidst the pandemic, only to find in more normal times that normality would largely ensue. What a surprise eh?
‘Additionally, and more broadly, most discretionary retailers are facing into the challenges of the macroeconomic slow down, centred around rising essentials inflation, which is squeezing household spending.
‘Made is not the only retailer to announce weaker trading in recent times. What it has been though is also exposed to the particular eschewing of the online channel by shoppers in 2022 as they seek to reduce the temptation to spend.
‘Furthermore, the reality is that most folks want to smell, touch and feel big ticket soft furnishings and so the reality of Made.com’s addressable market as a pure-play probably needs to be revisited.
‘Headlines around solvency are a nightmare for a big-ticket retailer as it creates understandable nervousness on behalf of the shopper as to whether or not their big-ticket order will arrive, so further deflecting custom away from a brand just when order flow and working capital are really needed.’
