Manchester-based consumer brands giant THG plc said on Friday it sold entertainment products division THG OnDemand to a company led by the unit’s management and funded by investment firm Gordon Brothers.

THG said it also sold cycling equipment retailer ProBikeKit to retailer Frasers Group, controlled by Mike Ashley.

THG shares fell about 7%.

THG said in a stock exchange statement: “On 17 January 2023 the group confirmed its intention to simplify and streamline its operations, undertaking a strategic review of loss-making categories and territories within the THG OnDemand division.

“The group has continued to execute on this plan and following an extensive market-testing process to secure optimal value for shareholders, the trade and assets of THG OnDemand have been sold to a Newco led by the existing OnDemand management team and funded by Gordon Brothers, the advisory and investment firm.

“The Newco will continue to be a client of Ingenuity, with the provision of technology, operational and digital services.

“In addition, specialist provider of cycling equipment ‘ProBikeKit’ was sold to Frasers Group PLC in Q2 2023. The combined consideration payable through both transactions is c. £4 million.

“The FY 2023 financial impact is incorporated into existing market guidance (inclusive of one-off costs), with discontinued revenues non-recurring after Q3 2023.

“Discontinued categories collectively contributed to an EBITDA loss of £14.6 million in FY 2022.

“As communicated within the AGM trading statement on 21 June 2023, free cash flow performance for the 12 months to 30 June 2023 was ahead of expectations (c. £40 million outflow), including disposal proceeds from the sale of non-core freehold assets.”

THG CEO Matthew Moulding said: “Through the years, our incubator division OnDemand has cultivated our talent, technology and trading strategies.

“I am delighted to see management and Gordon Brothers continuing the fantastic work of the OnDemand team, and I have no doubt the ProBikeKit business will continue to thrive under Frasers Group.

“We will remain close partners with both the OnDemand management team and Frasers Group through continued Ingenuity services.”

THG went public at £5 a share in September 2020 and the stock rose to around £8. However, THG shares have since fallen almost 90% to around 99p — slashing the firm’s stock market value to roughly £1.3 billion — following a disastrous presentation to investors and concerns over the company’s structure, transparency and governance.