THG rejects ‘numerous’ takeover approaches as cost pressures increase

The CEO of online retail firm THG said it has rejected several takeover proposals as it warned that soaring costs could curb its profit growth.

Founder and CEO Matt Moulding told shareholders on Thursday that it “has received indicative proposals from numerous parties in recent weeks”. However, he said the firm’s board concluded that “each and every proposal to date has been unacceptable, failing to reflect the fair value of the group”.

The company, previously known as The Hut Group, has faced speculation that it could be taken private after seeing a dive in its value following its 2020 stock market float. It came as THG reported that revenues increased by 16.3% to £520.2 million for the first quarter of 2022.

The company, which owns brands including MyProtein and Cult Beauty, said this reflected “very encouraging consumer demand levels” against a strong period last year while trading has started in line with expectations for the current quarter.

The retailer said it expects adjusted profits for the current year to be in line with 2021, representing a downgrade from analyst expectations due to soaring inflation. The company said it has seen cost increases across all categories and will raise prices at a lower level than its cost inflation, using efficiencies in its operations to absorb some pricing pressures.

Q4 2021 results (in constant currency):

• Group revenues were up by 29.7% to £712 million compared to 2020.
• THG Beauty saw an 38.9% increase in revenue to £408 million against 2020.

The group further highlighted the growth of its beauty segment, which had seen six orders per second placed during the peak cyber period.

Full year 2021 results (in constant currency):

• Group revenues saw a year-on-year increase of 38% to £2.2 billion compared to 2020.
• THG Beauty saw a year-on-year increase in 51% to £1.1 billion.

Moulding concluded: “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.

“I would like to thank all THG colleagues for their dedication and hard work in helping us achieve such a strong performance for the year. 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.”

Shares in the business increased by 1.1% in early trading.