Made.com shares plunge as furniture demand weakens

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17th May 2022

Bite-sized business news from the UK and beyond

Good morning 32 years after opening its first branch in Moscow, McDonald’s is bowing out of Russia. The fast-food giant temporarily shut down more than 800 restaurants, which employ 62,000 people, in March following the invasion of Ukraine but will now sell its Russia business. McDonald’s could take up to a $1.4bn hit from the sale.

Today's stories

Un-made – Made.com shares plunge as furniture demand weakens
Emptying breadbasket – India pulls the plug on wheat exports

ONLINE
Made.com shares plunge as furniture demand weakens

What happened?
Yesterday online furniture retailer, Made.com, announced that sales dropped 10% in the first quarter sending shares down 15%. Despite the fall the company said it was an outperformance compared to the wider furniture market that has seen sales fall by between 30% and 40% over the same period.

Made had been a lockdown winner
Founded 12 years ago in London, Made has become known for its sleek furnishings aimed at Millennials that it sells in the UK and a handful of other European countries. As an ecommerce retailer, the company performed well during the pandemic with more of us wanting to make our home surroundings more aesthetically pleasing during lockdown.

But the company is struggling to maintain the pandemic-related momentum
The company reported revenue growth of 30% in 2020 to £315m with over 1m customers but it’s not yet profitable. Made had forecast to turn a profit in 2022 but supply chain issues have scuppered those plans.

The retailer warned that soaring shipping costs would mean an additional £5m expense this year and drive a loss of as much as £35m for 2022.

Trading conditions are likely to be tough for retailers of high ticket items like furniture with consumers facing an unprecedented squeeze on their incomes.

There’s also less demand for homeware as the pandemic eases and people spend more time outside the home.

Made expects sales for this year to fall by as much as 15% and the company no longer expects to meet its target of £1.2bn sales by 2025.

The news comes within its (tough) first year as a public company
Made listed on the London Stock Exchange last June at 200p per share but have since lost over 70% of their value, amid ongoing supply chain issues and rising costs.

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Greggs sales lag in cities amid shift to working from home
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TRADE
India pulls the plug on wheat exports

What happened?
India announced a ban on wheat exports over the weekend, a move that threatens to drive up already-high food prices and worsen shortages of key crops caused by Russia’s invasion of Ukraine.

Why it matters
When Russia, the world’s largest exporter of wheat, attacked Ukraine, the world’s fifth-largest exporter of wheat, the global food supply chain had a backup plan in place which was to turn to India. But now the world’s second-largest producer of wheat is banning these exports.

It comes just weeks after Indonesia banned the export of palm oil, the most traded vegetable oil in the world. Together with Russian and Ukrainian sunflower oil, that means over 40% of the world’s vegetable oil market has been locked down.

What happens now?
The ban comes at a time when global food supplies are already crunched. Several developing countries in the Middle East and Africa, depend heavily on India’s wheat supply. Meeting over the weekend, G7 agriculture ministers warned the world faces a looming food crisis that threatens to leave 300m people without enough to eat.

Food related crises are starting to have political consequences
The prime minister of Sri Lanka resigned last week over protests driven in part by food shortages and demonstrations in Iran continued over the weekend.

Brits are also feeling the strain of higher food prices: local food banks across the country are reporting unprecedented demand.

There’s a big risk that shortages could lead to more countries following India’s and Indonesia’s example in a bid to protect their own supplies, a pattern that would cause more dysfunction in the world’s food system.

Stat of the day

New figures show that 23% of Brits would rather quit or find a new job than return to the office five days a week – the highest of any other country

Interesting links from around the web

Why Beyonce is recession-proof, according to Goldman Sachs
Why some countries have lower energy bills than the UK
The rise of the Chief Happiness Officer

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Made.com shares plunge as furniture demand weakens

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