THG CEO Matt Moulding
(Picture: THG)Beleaguered e-commerce group THG saw its stock slip further today after missing forecasts on profit margins.
THG, formerly known as The Hut Group, said margins for 2021 were set to be between 7.4% to 7.7%, compared to market expectations of 7.9%.
The company blamed a hit from foreign exchange rates. Analysts at Jefferies said the squeeze was “mostly due to spiking whey protein prices”. The company runs the popular website MyProtein alongside other businesses in fashion, beauty and wellness.
Margins are expected to improve this year but that wasn’t enough to stop shares dropping another 15.1p, or 8.1%, to 170.5p.
Barclays said predicting margins for the year ahead was “challenging and we can’t say with certainty that earnings have found a floor.”
Investors zeroed in on the margin squeeze in what was an otherwise upbeat Christmas trading update. Revenues rose 30% in the three months to 31 December to hit £711.7 million. That helped full year revenue rise 38% to £2.2 billion. THG forecast growth of 22% in 2022.
Russ Mould at AJ Bell said: “Under normal circumstances, a business delivering the level of growth seen in THG’s latest update would be applauded by the market.
“Sadly, THG has shot itself in the foot thanks to the way it has behaved as a listed company since joining the stock market. And that means only something spectacular will lift the share price.”
Once a hot stock, THG has seen its share price collapse over 70% since a peak last September. The City has been spooked by plans to spin out core parts of the company, a complex investment deal with SoftBank, and uncertainty around its platform business Ingenuity, which has become a prime focus. Long-running concerns around governance have also come to the fore.
Barclays said today: “With a heavily depressed share price, our take remains that there is a lot of fundamental value here… but, practically the Softbank relationship remains very important to market confidence. Here there is nothing new and, whilst visibility remains limited, there is no reason to be more or less positive in our view.”
Founder and CEO Matt Moulding has blamed short sellers for his woes. Public disclosures show roughly 1% of the company’s shares are on loan to investors betting against it.
Today, Moulding said it had been a “challenging” first year on the stock market but thanks staff for their “for their dedication and hard work.”
"The new year has started well, and we remain confident in delivering our strategic growth plans during 2022 and beyond,” he said.
Performance at Ingenuity is “well ahead of expectations”, Moulding said, with revenue growth of 135% to hit £45 million last year. The platform is expected to bring in just above £100 million this year, with 187 customers now live on the platform.
Nick Bubb, an independent retail analyst, said the update “provides plenty of meat for the bears and the bulls.”
