Troubled e-commerce firm THG revealed today that it had received several “unacceptable” proposals for the business in recent weeks. The statement came alongside record annual results, although the owner of various beauty brands warned that rising costs would hold back profit growth this year.
Earlier this year, it was reported that THG, previously known as The Hut Group, was being eyed by private equity firms for a potential buyout. This came after shares in the Manchester-based company fell over 80% amid a series of questions over its governance, strategy, and value of its tech business.
The group’s Founder and Chief Executive Matthew Moulding said today that its board had received “indicative proposals from numerous parties in recent weeks”, adding “each and every proposal to date has been unacceptable, failing to reflect the fair value of the group”. He stated that THG “is not currently in receipt of any approaches” and provided no further details on the proposals
Results for the year to 31 December 2021 showed the group’s adjusted EBITDA had risen 7% to £161.3m on revenues up 35.1% to £2.18bn. All its main divisions grew rapidly over the year, with sales at THG Beauty up 48.7%, THG Ingenuity increasing 41.5%, and THG Nutrition growing 17.3%.
For the current year, THG expects adjusted profit to be “broadly in line” with 2021 – a downgrade from analysts’ expectations of £206m due largely to higher-than-expected cost inflation that is only partially being offset by price increases. Its forecast for sales growth of 22-25% remains in place.
THG had previously warned that profit margins in its nutrition and beauty divisions, whose brands include Myprotein, Lookfantastic and Glossybox, would contract due to rising costs and adverse exchange rate movements. However, in its update today the firm noted that the war in Ukraine and Covid-related lockdowns in Asia had pushed costs up further and disrupted transport and manufacturing.
However, THG pointed to “very encouraging” demand in the first quarter of the current year, with group sales rising 16.3% as the long-term trend towards e-commerce continued to support new customer acquisition and retention.
THG stated that it would aim to limit the impact of rising costs on its consumers by absorbing some of the cost pressures and would raise prices “at a lower rate to underlying input costs.”
It added that it expected margins to return to 9% to 10% in the medium term. The margin was 7.4% during its last financial year.
Moulding commented: “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.
“Alongside significant revenue growth, FY 2021 saw us acquire and successfully integrate a number of complementary businesses, deepening our vertical integration across both Beauty and Nutrition and expanding our reach to consumers across the globe.
“The operational resilience and performance of our Ingenuity infrastructure, especially during our peak trading period was a highlight, as was the opening of our automated warehouse at our ICON technology campus, delivering material improvements and cost savings across our global storage and delivery infrastructure.
“Our technology platform is now powering an expansive list of global brands across a multitude of sectors, and the number of third-party websites has almost doubled during the year.”
The group hired former ITV boss Charles Allen as non-executive chair last month following concerns about its corporate governance.
“Charles’ extensive boardroom experience will help the group continue to drive profitable and sustainable growth, and to meet the highest standards of corporate governance,” Moulding said today.
“We remain confident in delivering our strategic growth plans for the year ahead and beyond, with full support from the board and our new chairman.”
