THG Shares Rise on Buyout Speculation As Company Reports “Indicative Approaches”
2022.04.21 13:05
By Geoffrey Smith
Investing.com — THG (LON:THG) shares rose 5.5% in London on speculation that the Direct-to-Consumer specialist could be bought, after CEO Matt Moulding said it had received tentative approaches from possible buyers in recent weeks.
“You will all be aware that there has been significant speculation about possible third party interest in THG,” Moulding said in a press release accompanying THG’s preliminary first-quarter results. “I can confirm that the Board has received indicative proposals from numerous parties in recent weeks. The Board has concluded that each and every proposal to date has been unacceptable, failing to reflect the fair value of the Group, and confirms that THG is not currently in receipt of any approaches.”
Moulding, whose performance has come under criticism due to the poor performance of the group’s stock since it listed in London 19 months ago, added that he would continue executing the group’s existing strategy.
By 5:30 AM ET (0930 GMT), THG stock in London was up 7.5% at a seven-week high. It’s still lost around five-sixths of its value since listing.
THG’s quarterly figures were slightly better than expected, and the company upheld its prior guidance for an increase of between 22%-25% in currency-adjusted revenue this year. Revenue was up 17% on the year, with the beauty segment growing 19.7% and the nutrition segment growing 12.6%. The number of websites powered by the group’s technology rose to 202 from 187 at the end of the fourth quarter.
It warned though that its margins may come under pressure as it tries to absorb at least some of the cost pressure currently affecting it. The company said it will aim to raise prices “at a lower rate to underlying input costs.”
“We believe the recent and rapid inflationary environment is largely transitory, and THG will, as far as possible, continue to shield consumers from these adverse macro-economic conditions,” Moulding said, going against the recent trend of increasingly alarmist rhetoric about inflation from companies across the spectrum. Moulding noted the importance of retaining customers, saying that 78% of its revenue comes from repeat business. Most of that comes from high-frequency purchases in the beauty and nutrition segments.
