News Analysis’s board scrambling to avoid investor panic

by Dan Byrne on Aug 19, 2022

British online furniture retailer’s board are in the middle of a strategy overhaul as the company struggles to recover from a costly twelve months. 

They are planning a share sale with the hope of raising around £50 million, but it’s unclear if this figure will be reached, given the turbulent times its industry has suffered. is an example of a company that blindly assumed it was safe, then was quickly caught by the deteriorating economy around it. Now its directors are scrambling to ensure investors don’t hit the panic button. 

Earlier this week, The Times reported that the company had earned the status of “worst-performing flotation of 2021”.

What happened to was founded in 2010 to sell furniture and related accessories, all exclusively online. Supported by aggressive expansion and warm reception among markets for the next decade, the company went on to profit enormously during the pandemic. Consumers moved all of their shopping online, and was waiting for them.

In June 2021, as the strictest worldwide lockdowns were finishing, the board sat comfortably at the helm of a firm that was valued at around £775 million.

What a difference a year makes.

Now that global lockdowns have passed mostly into history, demand has subsided, and the company’s primary source of revenue has started to fracture. Meanwhile, technology stocks – which depends on – have crashed, and the global spike in energy demand, spurred by the war in Ukraine, has spelt bad news for the company’s operating costs.

What is the current situation?

From a £775 million peak valuation, is now worth around £38 million. This is a drop in share price of over 94%.

How do’s directors fit into this?

The company’s directors use international powerhouse EY as its accountant. In March of this year, both parties signed off on a statement of ‘going concern’, declaring the company was functioning well. 

To recap: a going concern statement is essentially an agreement among those responsible for managing the company’s finances. It’s confirmation that the company expects to have enough cash at its disposal to pay all its debts in the coming year. 

Five months on, the company is looking for extra capital to avoid a balance sheet meltdown. 

It indicates that board, management and accountants put far too much confidence in itself and its market. Indeed, the full effects of Russia’s invasion on energy prices would not have been known in March, but the demand for online shopping had certainly begun to subside since the pandemic peak. How much of this information the directors took on board is up for debate.

Will the share sale work?

It’s difficult to say, but experts have already cast doubt over its prospects

The main problem is that the company is trying to raise a lot of money around the same time that most of its value has disappeared. Finding investors in that situation will be tricky, as will the task of convincing them to put forward cash. 

There is currently no date that the cash call to begin, but experts consider it likely soon. In addition, they also forecast losses of up to 600 jobs as the business looks to save costs.

What lessons should directors take from this?’s directors seem to have fallen into a classic trap of talking a company up to be more than it is. 

It’s understandable why this happens; directors must constantly worry about where investments are coming from, and selling a business can sometimes blur the line between genuine and speculative positivity. 

For, the market caught up with the directors too fast. This will not happen to every company that signs off on a confident ‘going concern’ document, but this case should serve as a warning. 

Economic projections fear a recession is coming, threatening a more significant amount of insolvencies. If their markets take a tumble, boards will not want to be caught on the wrong side of positivity.

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