THG Shares Rocked by Falling Sales as Apollo Mulls Takeover

THG Plc shares fell after a disappointing performance last year and a slow start to the first quarter, amid fresh takeover interest in the British online retailer.

(Bloomberg) — THG Plc shares fell after a disappointing performance last year and a slow start to the first quarter, amid fresh takeover interest in the British online retailer.

The company’s shares fell nearly 18% in early London trading after adjusted earnings more than halved in 2022 compared with the prior year, and sales in the first three months of the current fiscal year turned negative.

Chief Executive Officer Matthew Moulding blamed the weaker showing last year on the effects of inflation on its customers’ wallets and efforts to refocus the business on more profitable activities. The business formerly known as The Hut Group expects low to mid-single digit revenue growth this year as it cuts costs as part of a wider review. In previous years THG reported double-digit revenue uplifts.

THG said Monday that it has received a non-binding acquisition bid from Apollo Global Management Inc. and the private equity firm has until May 15 to make a firm proposal.

Co-founded by Moulding, the company has previously struggled with governance concerns, high prices for whey in its protein shakes, and doubts over the profitability of its Ingenuity unit which helps other retailers sell online. Earlier this year THG unveiled a strategic review of loss-making areas, including its OnDemand division which allows brands to personalize items with customers’ names.

THG’s Ingenuity platform announced a 10-year deal earlier this month with online beauty retailer Maximo Group to run two of its e-commerce websites. The partnership will add an extra £150 million ($186 million) of merchandise to Ingenuity each year.

The company, which is facing pressure from an activist investor, said it’s forging ahead to move its listing to London’s premium market later this year. Moulding will give up the rights attached to his special share in September, paving the way for the move, something the retailer had pledged to do by the end of last year. THG also reported on profitability by division in its business, another recent request of activist investor Kelso Group Holdings Plc.

(Updates with share move in second graph, context from fifth.)

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