THG shares fall 17% amid review, profit guidance cut

THG CEO Matthew Moulding

Shares of Manchester-based THG plc fell as much as 17% after the firm announced it is reviewing the future of its loss-making businesses outside of its beauty, nutrition and Ingenuity platforms and warned that 2022 profit is now expected to be lower than forecast.

In a trading statement, the e-commerce group, which operates hundreds of websites, said the strategic review would lead to a “simplification” of its business.

It said adjusted 2022 earnings are now expected to be in the range of £70 million to £80 million, having previously forecast earnings of as much as £130 million.

THG reported record sales of £2.25 billion in 2022, with 9.4% growth in THG Beauty and THG Nutrition “primary territories.”

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 56p — slashing the firm’s stock market value to roughly £700 million — following a disastrous presentation to investors and concerns over the company’s structure, transparency and governance.

THG CEO Matthew Moulding said: “In a year that presented numerous challenges across the world, I’m proud that the THG team has delivered another record revenue performance at £2.25 billion.

“Amongst many highlights, I’m especially pleased with the progress of Ingenuity, successfully competing with major global technology giants to transform digital operations for global retailers and brands.

“With the completion of the divisional reorganisation, and around £100 million of annual efficiency savings already delivered, the group enters 2023 with strong momentum to achieve substantial margin expansion.

“Core commodity prices used within our Nutrition division have seen significant deflation since their record highs in 2022, giving us confidence in significant profit progression as we move through the year ahead, against a much reduced group cost base.

“We remain highly confident of delivering adjusted EBITDA margins in excess of 9.0% over the medium-term.

“Our delivery of c. £50 million free cashflow in H2 2022, coupled with c. £640 million of cash and facilities at year end, mean we are well positioned for further operational and strategic progress, notwithstanding the continued macroeconomic uncertainty.”