THG reported its annual earnings today and announced that it is receiving “numerous” takeover proposals over the last few weeks. The good start to 2022 has helped the E-commerce retailer’s shares gain 15% to 108p on Thursday after seeing a 50% decrease in share price YTD.
THG debuted on the London Stock Exchange in September 2020. Since then, the organisation’s life as a publicly-traded company has not been easy.
The shares were priced at 500p each when they went on the market. The stock was up 15% to 108p each on Thursday, meaning shares are trading down over 80% from the IPO price.
In October of 2021, a capital markets day intended to boost investor confidence instead scared traders. THG shares have been under selling pressure since then.
In October, Moulding, the company’s founder and CEO, stated that he will surrender his so-called ‘golden share,’ resolving a corporate governance issue that has been bothering investors and allowing the company to join the FTSE indices. The decision was made “in furtherance of good corporate governance”.
For three years, Moulding could use the stake to veto any takeover bid. Investors dislike it, and it prevents THG from joining the FTSE 100 or FTSE 250 indices.
Moulding stepped down as executive chair in March, but he kept his CEO position. Charles Allen has been named as an independent non-executive chair of THG.
“We continue to focus on delivering our exciting growth strategy across a number of large global sectors, and prepare to step up to the premium segment of the LSE at the appropriate time,” said Chief Executive Matthew Moulding.
THG Takeover Proposals
THG has reportedly rejected all takeover proposals it has received in recent weeks due to the company believing the bids did not reflect the full value of the firm. The company confirmed that it is “not currently in receipt of any approaches”.
THG FY ’21 Results and Q1 ’22 Trading Update
During the first quarter of 2022, THG saw “very encouraging” consumer demand compared to a challenging period during the lockdowns in 2021, resulting in Q2 beginning in line with expectations.
THG’s revenue in the first quarter of 2022 increased 16% to £520.2m compared to 2021. The company expects revenue growth to be between 22%-25% at constant currency, however, THG faced a 1% hit from Russia and Ukraine.
The company continues to have similar growth expectations in its adjusted earnings before interest, tax, depreciation and amortisation.
THG’s adjusted EBITDA is estimated to stay around £161.3m in 2021, a 7% increase from £150.8m in 2020. The group’s adjusted EBITDA margin fell to 7.4% in 2021 from 9.3%. Recent increases in inflationary pressure, according to THG, are “transitory in character.”
“The near-term environment has evolved significantly since January due to a number of global factors including the war in Ukraine, Covid-19 related lockdowns in Asia, and inflationary pressure across almost all cost lines,” said the company.
“Given the continually evolving external considerations, the board anticipates FY 2022 adjusted Ebitda to be broadly in line with FY 2021, with a weighting to H2 2022.”
In THG’s FY 21 results, the group reported revenue of £2.18bn in 2021, a 35% rise from £1.61bn in 2020. The company’s pre-tax loss, however, decreased from £534.6m to £186.3m in 2021.
CEO Moulding stated, “In our first full year as a public company, 2021 saw us scale revenue and expand our business model, well ahead of targets set at IPO.”