THG shares up 20% as it signs banking facility

THG CEO Matthew Moulding

Shares of THG plc, the Manchester e-commerce, beauty and nutrition firm, rose as much as 20% on Tuesday after the troubled online retailer revealed the key terms of a recently-signed £156 million banking facility and published a third quarter trading update for the period ended September 30, 2022.

The banking facility has been provided equally by existing lenders BNP Paribas, HSBC and NatWest.

THG said its THG Beauty and THG Nutrition core territories delivered quarterly revenue growth of 10.2%, ahead of the group growth rate overall of 2.1%.

In its guidance, THG said YTD group revenue growth of 8.8% “is in line with expectations, supporting FY 2022 revenue growth guidance of +10.0% to +15.0% which remains unchanged.”

It said full year adjusted EBITDA guidance is maintained between a range of £100 million to £130 million “pre Software-as-a-Service (SaaS) cost reclassification.”

THG said its guidance for cash on hand at year-end of £500 million remains unchanged, with an additional £170 million undrawn revolving credit facility available.

On October 17, THG announced that SB Northstar LP, a trading arm of Japan’s Softbank, agreed to sell its entire stake in THG at 39p a share to existing THG shareholder Qatar Investment Authority (QIA) and THG CEO Matthew Moulding. 

SB Northstar LP agreed to sell 67.8 million shares to QIA and 12.8 million shares to Moulding. 

The move saw Softbank finally end speculation about its disastrous investment in THG, writing off as much as £450 million of a stake that was once valued at about £500 million.

THG went public at £5 a share in September 2020 and the stock rose to around £8.

However, THG shares have since fallen more than 90% to around 55p  — slashing the firm’s stock market value to roughly £700 million — following a disastrous presentation to investors last October and concerns over the company’s structure, transparency and governance.

THG CEO Matthew Moulding said on Tuesday: “Another strong quarter of delivery across our Beauty and Nutrition divisions has enabled market share growth in our key global territories.

“We remain committed to our strategy of supporting our customers around the globe through investment in price protection, without compromising on quality or choice.

“As commodity prices ease further, we remain well positioned to grow margins into 2023, whilst reducing pricing to consumers.

“This positions the group well in continuing to expand market share.

“As cost of living pressures rise, customers are continuing to prioritise beauty, health and wellness categories and, through investing in bringing them into and retaining them within the THG ecosystem, we are laying the foundations for our future growth.

“The fourth quarter has started positively, and we are well positioned from a logistics and supply perspective to meet the significant uplift in demand anticipated during the cyber period, whilst continuing to deliver a high-quality customer experience.

“I’m delighted to confirm the signing of the recently announced £156 million of incremental capital from three long-standing lending partners on highly attractive terms.

“Given the current market environment, this is a strong endorsement of the group’s long-term business model, alongside the recently announced increased investment from Qatar Investment Authority.”