18th Jan 2022 15:11
(Alliance News) -Â Investors were unimpressed with online retail platform operator THG PLC's latest update, dragging its shares on Tuesday to a new all-time low.
THG shares were down 10% at 167.10 pence in London on Tuesday afternoon, the stock down 77% over the past 12 months. Earlier in Tuesday's session shares hit a low of 164.6p, its worst ever price, and well below the 500p at which the stock debuted in September 2020.
Dogging the stock on Tuesday was a warning over margins and guidance of slowing sales. Fourth-quarter revenue was GBP711.7 million, up 27% on a year ago and nearly double on a two-year basis. For 2021 as a whole, revenue rose 35% to GBP2.18 billion.
However, the beauty products retailer's full-year adjusted earnings before interest, tax, depreciation and amortisation margin is expected to be in the range of 7.4% to 7.7%, compared to market expectations of around 7.9%, after taking into account 90 basis points of adverse foreign currency movements, it said.
For 2022, the margin is expected to improve throughout the year, and revenue growth is seen in a region of 22% to 25% at constant currencies, slowing from the 38% achieved in 2021.
Davy said this guidance implies a 5% cut to its earnings forecasts for 2021 and the Irish broker will also look to trim its 2022 Ebitda prediction of GBP229 million by 9%.
Analysts, according to company-compiled consensus, expect revenue of GBP2.20 billion for 2021 and adjusted Ebitda of GBP174.8 million. Revenue in 2020 was GBP1.61 billion and adjusted Ebitda GBP150.8 million.
Revenue from Ingenuity Commerce - the e-commerce technology platform that THG offers to other retailers and that is expected to be a driver of company growth - remained a small part of the total at GBP15.4 million in the fourth quarter, though this was more than doubled from GBP7.3 million a year before.
For all of 2021, Ingenuity Commerce revenue was GBP45.4 million, up from GBP19.3 million in 2020 but still only 2.1% of total revenue.
THG Beauty remained the main revenue provider in 2021 at GBP1.12 billion, up 49% from GBP751.6 million.
THG said it has a "substantial pipeline of site launches within THG Ingenuity", and the company repeated its revenue guidance for the division in 2022 of GBP108.0 million to GBP112.0 million.
"Despite challenging conditions, we have scaled revenue and expanded our business model, particularly THG Ingenuity, well ahead of expectations given at our IPO 16 months ago," said Chief Executive Officer Matthew Moulding.
He added: "The new year has started well, and we remain confident in delivering our strategic growth plans during 2022 and beyond."
But AJ Bell investment director Russ Mould commented: "The fact THG is guiding for revenue growth to slow in 2022 is even more reason for disgruntled investors to keep shaking their heads in disbelief."
By Lucy Heming;Â [email protected] and Tom Waite; [email protected]
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