THG shares fall again amid caution over 2022

Embattled online retail giant and technology group THG has cautioned over a more challenging start to 2022 amid soaring commodity prices and without last year’s boost from lockdown.

The Manchester-based company, previously called The Hut Group, saw under-pressure shares fall by a further 8% as it also warned over lower-than-expected profit margins for 2021 due to currency movements and rising costs.

THG said it expects sales growth to slow to between 22% and 25% over 2022, down from 37.9% in 2021, as it comes up against tough comparisons from a year earlier, when the UK was in lockdown, as well as record commodity prices and the knock-on effect on its nutrition division.

The more cautious outlook overshadowed figures showing the group’s highest-ever annual sales of £2.2 billion thanks to “significant growth” over the festive season.

It comes after a torrid past few months for THG, which saw a shares sell-off last autumn because of concerns about its corporate governance and the value of its platform business, Ingenuity.

The group – which is behind brands such as LookFantastic and Myprotein – held a capital markets day in October and sought to soothe investor worries, but it backfired as the company’s value crashed by 35% that afternoon.

It has since hired recruitment firm Russell Reynolds to find an independent non-executive chairman as part of plans to move the firm to a premium listing on the London Stock Exchange.

And founder, chief executive and chairman, Matthew Moulding, has said he would relinquish his golden share shareholder structure, which stopped it from being included on London’s FTSE indices.

But the assurances have failed to prevent THG losing more than 75% of its stock market value over the past year.

Its latest update showed fourth-quarter sales jumped 29.7% year-on-year to £711.7 million, with all divisions seeing robust growth.

It said it dispatched more than one million units a day at peak periods over Christmas.

The group said foreign exchange changes are set to leave underlying profit margins lower than forecast, though it expects this to recover over the year as investment in automation and new client wins offset cost pressures.

Mr Moulding said: “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.”

He added: “The new year has started well, and we remain confident in delivering our strategic growth plans during 2022 and beyond.”