Made.com has issued a FY22 earnings warning as recent trading has been “volatile” amid deteriorating consumer confidence, which in turn has weighed on demand for big purchases.
According to the retailer, a decline in consumer confidence has made acquiring new customers at financially attractive prices “challenging”, while gross sales for the first half of 2022 were -19% compared to last year.
The group has now updated its guidance, expecting FY22 sales to decline by -15% to -30%, down from previous guidance of 0% to 15%. Full year EBITDA is expected to be -£50m to -£70m, down from -£15m to -£35m.
The group based this update on one-off costs, volatile trading and continued expectations of no near-term improvement in discretionary high demand nor new customer acquisition.
Profitability in 2022 is also expected to be adversely affected by additional promotional and clearance activity and additional supply chain costs due to port disruptions and additional processing at warehouses.
The group said it is now “actively addressing” all non-strategic fixed costs in the business to help better position it for the future, with areas of focus including forward share buying, warehousing and supply markets, as well as a review of the operational structure and the number of employees.
Nicola Thompson, chief executive of Made.com, said: “It’s clear that things are tough for consumers right now. It is understood that we have seen a deterioration in consumer confidence since May and this has had an impact on performance over this period. Therefore, it is reasonable for us to take a conservative view of what we can expect in the second half of this year.
“Thanks to the hard work and determination of our team at MADE, we have made strong strategic progress during this period, despite a challenging macroeconomic environment. Looking at our performance over recent years, we have been able to grow the business by 57% since 2019, our last year without interruption, and have increased our market share.”
She added: “To enable us to continue to deliver on our strategy, we are taking steps to address non-strategic costs across the business, as well as considering options to enable us to strengthen the balance sheet sufficiently to navigate what will undoubtedly continue to be to be challenging conditions. We are confident that this will put us in a strong position in the coming years.”