Steep losses looming: Made.com warns job cuts are coming to slash costs after dive in consumer spending
Made.com said this morning it has launched a review its workforce amid efforts to slash costs as a slump in consumer spending is set to send it tumbling to steep losses.
The group said it is looking at its operational structure and headcount, as well as improvements to stock buying and warehousing to try to boost its bottom line by £10m to £15m.
It is also “considering options” to bolster its balance sheet and finances.
The group’s share price had tumbled 41 per cent by Tuesday afternoon.
It comes as the group said annual losses are likely to be worse than feared, with a 19 per cent plunge in half-year sales set to send it tumbling to an annual underlying loss of between £50m and £70m.
In May, it warned it was set to slump to a loss of between £15m and £35m, against previous guidance for underlying earnings of up to £15m, which sent its shares plummeting.
The group said it is being hit by a sharp pullback in demand for so-called big ticket items – such as sofas – as the cost-of-living crisis affects consumer confidence.
It has had to launch cut-price promotions to shift old stock, which has hit profits, while it is also facing extra supply chain costs due to disruption at ports and extra handling at warehouses.
Made.com chief executive Nicola Thompson 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.”
CEO Nicola Thompson
“As such, it’s prudent for us to take a conservative view of what we can expect in the second half of this year.”
She added: “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.”
The group’s update shows first-half sales dropped 22 per cent year on year in the UK and 15 per cent across Continental Europe. Orders by number also fell heavily, down 29 per cent in the UK and 21 per cent in Europe.