Stock of the Week: THG PLC

THG has taken radical steps to improve its profitability and governance.

THG, formerly the “The Hut Group”, is a leading vertically integrated, global e-commerce technology group and brand owner. Through its proprietary technology platform, Ingenuity, THG provides end-to-end e-commerce solutions for brands to reach a global consumer base. The company operates under three core divisions: THG Beauty and THG Nutrition developing a portfolio of leading brands and THG Ingenuity accelerating direct-to-consumer growth for third-party clients.

In 2004, the company was founded in Manchester (UK) by Matt Moulding and John Gallemore. The company sold CDs and DVDs online before creating white-label web stores for large retailers like Tesco or WHSmith. Over the years, the group acquired various retailers leveraging technology and warehouses. The main focus is on beauty and lifestyle products due to the high margins and scalability. The IPO at the London Stock Exchange dates to September 2020, the largest IPO since 2013.

The shares of THG lost more than 80 per cent of their value since the IPO. Recent board updates have improved the governance situation and co-founder and CEO Matt Moulding has given up his arrangement, which allowed him to veto takeovers. Also, Helen Jones as another independent non-executive director joined the board, replacing Ian McDonald due to independence concerns. In the pre-AMG trading update, THG said, it had a strong second quarter and expects this year’s profits in line with the analyst consensus of GBP 118.5 million. On July 21st, 2023 THG announced, that two loss-making businesses, OnDemand and ProBikeKit, were sold in order to reverse lacklustre performance and regain confidence from investors.

Here is how the bank analysts and the professional press currently view the stock:

• The professional social media sentiment is neutral to slightly negative for the company. The sentiment for the sector the FTSE100 index is slightly more positive, but still neutral.

• Currently, the attention buzz around the company is average.

• The bank analysts’ consensus is a “hold”. Out of 10 analysts covering the stock, 4 recommend buying the stock, 4 recommend holding it, and 2 analyst suggests selling it.

Sources:

1. https://www.thg.com/group-structure/our-strategy

2. https://en.wikipedia.org/wiki/THG_plc

3. https://umushroom.com/en/equity/thg-thg

4. https://www.ft.com/content/b32cb269-734d-4f9c-9341-338a1a2aaa05

5. https://www.ft.com/content/850c8321-d31f-4563-a4a7-4251100a1c64

6. https://umushroom.com/en/equity/thg-thg