Jump to content

THG shares fall by 22% as half-year results disappoint


Recommended Posts

Despite some bright spots, THG’s share price has fallen sharply amid the company’s ongoing turnaround strategy.

thgSource: Bloomberg


 Charles Archer | Financial Writer, London | Publication date: Thursday 14 September 2023 

THG shares (LON: THG) fell by 22% to 69p on Thursday as the beauty and lifestyle websites operator delivered weaker-than-expected half-year results. The company, formerly known as The Hut Group, has fallen a long way from its September 2020 IPO — when shares soared by 30% on the first day of trading to 646p within a couple of hours on the market.

Remember, past performance is not an indicator of future returns.

THG shares: half-year results

Group revenue fell by 9.3% year-over-year to £969.3 million, ‘driven by the strategic exit of non-core divisions and discontinued categories, short-term volume reductions within THG Beauty manufacturing, the previously stated de-emphasis in certain beauty markets and the proactive pivoting of the THG.’

However, adjusted EBITDA increased to £47.1 million from £32.3 million in H1 2022, partially due to losses on discontinued products reducing from £8.5 million to £3.1 million as a result of the company’s ongoing strategic review.

Operating losses came in at £99.5 million, £10.3 million more than in the same half last year. Again, the company highlighted the impact of a £26.2 million one-off charge that came with disposing of non-core assets and loss-making discontinued categories.

Positively, cash generation over the past year has been stronger, and the company maintains a relatively strong balance sheet, with cash on hand of £392.5 million and an undrawn £170 million revolving credit facility at the end of the reporting period.

However, active customers in key segments THG Beauty and THG Nutrition fell by 10% and 5% respectively.

Where next for THG shares?

THG has run into a plethora of troubles over the past couple of years. CEO Matt Moulding — who has publicly lamented the IPO as a ‘mistake’ — has given up his golden share which blocks takeover attempts. The company rejected an approach by Apollo Global Management in May, arguing it had ‘no merit’ due to ‘inadequate valuations and the nature of those offer structures.’

The price of whey, a key ingredient in its protein shakes, has rocketed. However, the nutrition business did still enjoy record first-half revenues of £340.7m, with adjusted EBITDA of £47.1m, up 71.9%.

Conversely, the key Ingenuity division, which helps other retailers sell online, has come under heavy speculation over future profitability — with revenue falling by nearly 15%. On the other hand, there were some key client wins in the half, including L'Oréal US prestige brands, having listed in the Gartner's Magic Quadrant for Digital Commerce.

Moulding notes that ‘Inflationary pressures provided significant challenges to consumers and businesses alike over the past 18 months. Our strategy of supporting our consumers through 2022, sacrificing margins in the short-term, is bearing fruit. This is reflected in the strong H1 results we've posted today, across adjusted EBITDA and cash.’

Looking forward, the company advises that ‘Q3 revenue exit momentum gives us confidence in full year continuing revenue growth of 0% to -5%.’ While this would represent an improvement from the revenue fall in H1 2023, growth is perhaps not the right word to use — particularly when the company was previously forecasting a low-to-mid-single digit increase.

THG does anticipate Q3 continuing revenue to be ‘marginally ahead of Q2’ and the board still expects to see ‘FY 2023 Group Adjusted EBITDA in line with the company consensus.’ Encouragingly, it’s expecting to enjoy free cash flow breakeven for FY 2023 as a whole.

Longer-term, THG is still planning to move to the premium segment of the London Stock Exchange and is still facing pressure from several activist investors. Arguably, Moulding’s turnaround strategy is now at a precarious stage, which could nevertheless bear fruit.

Given the share price reaction, value investors may be tempted to buy the dip — but this hasn't been the first dip this year.



This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • image.png

  • Posts

    • The P2E ecosystem has always been both fun and rewarding and that world is about to welcome a game-changer in Animalia's ANIM token. With my portfolio of playing all kinds of games and recently the P2E genre, I will say Animalia is a mix of Axie Infinity and Pokemon, with a dash of Dogecoin thrown in for good measure. Animalia is a captivating new game that blends meme-tastic creatures, strategic card battles, and the power of blockchain technology. And at the heart of this ecosystem lies the ANIM token, ready to unlock a world of possibilities. With an affordable initial market cap and a bull market launch, Animalia wants everyone to join the fun. Competitors like Axie Infinity and Gods Unchained have paved the way, but Animalia brings its own unique blend of humor, education, and community focus. It's not just about battling, with Animalia you can collect unique cards, own a piece of the game, and participate in shaping its future through governance rights. Animalia also raises awareness about endangered species and the importance of animal conservation. I have to say I Animalia have done a good job with the graphics of the game albeit a card game. I saw an opportunity with the first 1,000 users who achieve a spot net buy volume of 100 USDT in ANIM/USDT pairs will receive 56 ANIM each during the current promotion on Bitget until March 1. I like to play but I love to earn too so I'm heading over! What are your thoughts about Animalia? Are you going to be an early bird to get you share of the ANIM worm?
    • Hey everyone! I want to play free games that use NFTs in a fun way. GameFi is getting big lately with new ways to play and earn. Does anyone know of games where you can start playing for free, but they still use NFTs in a cool way? Maybe with animal or crypto cards... We know NFTs can make games more fun instead of just seeming like a money grab.  Specifically, I'm looking for games that: - Are really fun even if you don't spend money - Have an active community of players  - Are on major platforms like Bitget etc. - Let you collect rare NFTs just by playing that are worth keeping - Have developers who are involved and keeping the game fresh or have partnerships that will help it last Let me know if you've tried any games that fit what I described above. I'm open to exploring new projects in my spare time.
    • I'm intrigued by NADA Protocol's vision of integrating blockchain technology into the gaming experience. The prospect of owning and trading in-game items through NFTs adds an exciting dimension to gameplay, offering real rewards and enhancing immersion. The marketplace controlled by the NADA token seems promising, providing a platform for users to engage in trading activities within the gaming ecosystem. I'm optimistic about NADA's potential to carve a niche for itself in the competitive gaming world, especially with its focus on creating a fun and economically rewarding gaming environment. Looking forward to exploring this new gaming frontier!
  • Create New...