Shares of Manchester-based consumer brands giant THG plc fell about 17% on Tuesday after it published results for the financial year ended December 31, 2022, and a trading update for the three months ended March 31, 2023.
THG said group revenues increased 2.7% to £2.239 billion in 2022 and it incurred an operating loss of £495.6 million “impacted by the non-cash impairment of £275.4m, in addition to certain non-recurring costs …”
THG said first-quarter revenue fell 8.6% to £469.4 million.
THG shares had soared about 30% on Monday after it confirmed it received “a highly preliminary and non-binding indicative proposal” from New York-based private equity firm Apollo Global Management to buy THG.
THG went public at £5 a share in September 2020 and the stock rose to around £8. However, THG shares have since fallen about 90% to around 85p — slashing the firm’s stock market value to roughly £1.1 billion — following a disastrous presentation to investors and concerns over the company’s structure, transparency and governance.
THG CEO Matthew Moulding said: “We continue to make good progress on executing our strategy of building a leading digital-first consumer brands group, powered by our own technology and global fulfilment operations.
“I am hugely proud of the THG team who have delivered another record revenue performance.
“While FY 2022 adjusted EBITDA was not where we planned at the start of the year, this was largely the result of our strategy to minimise the impact of inflation upon our customer base. This investment in their retention, and longer term growth, was the principle driver behind the reduction in gross margin.
“The challenging macro and inflationary environment required decisive action across the business with around £100 million of efficiency savings delivered. A much-improved outlook on many key cost inputs gives us confidence in an improved financial performance as the year progresses.
“In THG Ingenuity, we appointed a highly experienced CEO to focus on long-term, higher value enterprise accounts. The repositioning of the division is on track with the strategy now paying dividends, evidenced by recent announcements and a strong 2023 pipeline.
“We are nearing completion of a three-year major infrastructure investment programme. While this has inevitably involved significant investment and transition costs, the less than 2-year return on investment is pleasing.
“The global capability it now provides gives us increased confidence in our ability to continue to capture market share whilst accelerating both profitability and free cash flow generation.
“We have the technology infrastructure and the global fulfilment capability which, coupled with our continuous engagement with our millions of customers worldwide who love the high-quality products we present to them leaves us well positioned to capitalise on this path of growth.”