The Hut crashes to a loss of £550m: but as private equity predators circle, Molding insists it was the company’s best year ever
Takeover target The Hut Group crashed to a record loss on yet another dismal day for the company.
Less than 24 hours after announcing it was approached by US private equity group Apollo, the online retailer said annual losses almost tripled to £550m last year.
The company, which owns websites LookFantastic and Myprotein, also warned that revenues were sharply lower in the first three months of this year.
Shares in THG – as the group is now known – fell 19.8 percent, or 19 pence, to 76.76 pence, after rising 45 percent the previous day following news of Apollo’s interest.
Gold share: THG, founded by Matt Molding (pictured with his wife Jodie) said annual losses nearly tripled to £550m last year
Founder and CEO Matt Molding admitted earnings “were not where we planned at the beginning of the year.”
But he insisted that “there’s no question that 2022 was our best performance yet,” adding: “Given everything that’s going on in the world, I’m super happy with where we are.”
The stock’s fall was just the latest car crash for Molding, who made no secret of his disenchantment with his experience in the London stock market, saying it was “simply worthless from start to finish.”
The shares were trading at 500p in September 2020, valuing THG at £5.4bn, and peaking at almost 800p in early 2021.
But they changed hands for just over 30p last year, and despite turning a profit since then, the company is now worth around £997m.
The stock price collapse has caught Apollo’s attention, making THG just the latest in a long line of UK companies targeted by private equity predators looking for a bargain. J
Julie Palmer, a partner at business recovery specialist Begbies Traynor, said a firm offer from Apollo “could be a relief” for both Molding and THG’s “long-suffering shareholders.”
Victoria Scholar, head of investments at investment platform Interactive Investor, said: “THG shareholders have had an extremely difficult time. Investors hope that a buyout can put an end to this bad chapter.’
Molding highlighted “runaway inflation” and blames the annual loss on higher prices for key ingredients, such as whey protein commonly used in its sports nutrition business, as well as one-time costs for layoffs at now-closed divisions.
At the same time, THG said it is prioritizing keeping price hikes at bay for customers at the expense of profit margins.
Sales rose just 2.7 percent to £2.2 billion last year and fell 8.6 percent in the first three months of this year.
Molding said, “2022 was without a doubt the most challenging global environment we have seen since THG was founded nearly 20 years ago.
An extraordinary backdrop of runaway inflation, rapidly rising interest rates and major geopolitical events created significant macroeconomic and consumer uncertainty.
“I am incredibly proud of how THG and the team have responded to these challenges.
“There’s no doubt in my mind that 2022 was our best performance yet, even given the year-over-year decline in profitability.”
And as a boost to investors, he confirmed he would give up his so-called ‘golden shares’ rights in September, which would allow the company to move from standard listing to the FTSE 250.
The gold share allows Molding to veto takeover attempts.