THG (THG) is having a rough time of things. The ecommerce specialist’s shares have lost more than 80 per cent of their value over the past year amidst mixed results, market uncertainty over plans to spin out its beauty business, corporate governance concerns and asset manager BlackRock halving its stake.
The company’s recent trading update, for the fourth quarter to 31 December, didn’t help. While THG announced record annual revenue of £2.2bn, it advised it would miss profit margin targets. The adjusted margin before interest, taxes, depreciation and amortisation will be around 7.4-7.7 per cent, against market forecasts of 7.9 per cent, a downgrade the company pinned on 90 basis points of “adverse foreign currency movements”.
Market excitement over the company’s technology services division, Ingenuity, has dimmed somewhat, despite year-on-year sales growth of 43 per cent. Japanese conglomerate SoftBank holds an option to buy a 20 per cent stake, although this looks increasingly remote.
In this context, it’s fair to say that it probably won’t cheer investors to hear of a significant share sale involving group commercial director Steven Whitehead.
The Guernsey-domiciled investment vehicle FIC Shareco Limited, which is a PCA of chief executive Matthew Moulding, sold 6.9mn THG shares on 26 January. The shares, beneficially owned by Whitehead, were disposed of at a price of 123p for a total consideration of £8.5mn.
While margins are expected to recover as this year progresses, with automation helping with inflationary pressures, THG has an uphill struggle to regain the confidence of the market. The company has also been hit by a wider sell-off in technology stocks in early 2022.
