21st Apr 2022 15:31
(Alliance News) - THG PLC expressed confidence in recent trading as the beauty products retailer spurned "unacceptable" takeover approaches after a turbulent year.
THG on Thursday reported annual earnings growth, a decent start to 2022 and added that it has received "numerous" takeover proposals in recent weeks.
The online beauty products platform said it rejected all the proposals as they do not reflect its fair value. It also confirmed it is not currently in receipt of any approaches.
The update came alongside THG's annual results, which showed revenue in 2021 jumped 35% to GBP2.18 billion from GBP1.61 billion the year before. Its pretax loss slimmed to GBP186.3 million from GBP534.6 million.
Chief Executive Matthew Moulding said: "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. We delivered a record revenue performance for the year, with group revenue up 38% year-on-year to GBP2.2 billion. On a two-year basis, THG has grown revenues 95%; effectively doubling the size of the business.
"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."
On more recent trading, THG said the first quarter of 2022 saw "very encouraging" consumer demand against a challenging comparable lockdown period in 2021, and added that the second quarter has started in line with expectations.
THG made its London Stock Exchange debut back in September 2020. Life as a listed company has not been plain-sailing since then.
Shares floated at 500 pence each. On Thursday in London, the stock was up 16% at 110.40p each, meaning shares are down around 80% from the IPO price.
A capital markets day in October of last year, designed to shore up investor confidence, spooked traders instead. Since then, THG shares have faced selling pressure.
Also in October, founder and CEO Moulding announced he will give up his so-called 'golden share', clearing away a corporate governance issue that has troubled investors and opening up the possibility of joining FTSE indices. The move was made "in furtherance of good corporate governance".
The share allowed Moulding to veto any takeover bid for three years. It has been unpopular with investors and blocks THG from joining the FTSE 100 or FTSE 250 indices.
In March, Moulding stepped aside as executive chair, though he remained as CEO. THG appointed Charles Allen as independent non-executive chair.
AJ Bell's Russ Mould said: "While the company hasn't disclosed who was behind recent approaches, one can only speculate it is private equity looking to sift through the bones of the company after its share price collapse. Even bad businesses might offer some value if you look hard enough.
"Chief executive Matthew Moulding has had many a cold shower since THG joined the stock market and he certainly isn't going to let an asset stripper pick up the company on the cheap. Whether his idea of what the business is actually worth is reasonable or (more likely) in fantasy land, one cannot help feel that long-suffering shareholders might welcome a chance to get out now at a small premium to the market price so they can at least cut their losses and put the sorry episode behind them."
By Arvind Bhunjun; [email protected]
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