Matthew Moulding Takes Action at THG After a Tumultuous Year
After an annus horribilis in 2021, one of Britain’s top tech companies specializing in nutrition and beauty is about to make some major changes to its structure, management and operations.
THG, formerly The Hut Group, landed on the London Stock Exchange with a blockbuster IPO in September 2020, but has had a bruising year on the public markets since then. In the past 12 months, its share price has dropped nearly 77 percent to 1.83 pounds, and its market capitalization, at 2.24 billion pounds, has more than halved in value since the IPO.
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The share price began falling as questions arose about cofounder Matthew Moulding’s oversight of THG — he is chairman, chief executive officer and also holds a “golden share,” which gives him special veto powers and the ability to block takeover attempts. In addition — via a series of complex deals — Moulding is also THG’s main landlord through a separate investment company.
Add to that two negative analyst reports that emerged last fall questioning the value of THG’s Ingenuity platform, which licenses end-to-end e-commerce solutions to brand owners, provides various other digital services and undertakes beauty product development and manufacturing for third parties.
Following the publication of the analyst reports, THG’s shares plummeted. Numis, which had accused THG of accounting irregularities, retracted that part of the report, apologized to THG and later referred itself to the Financial Conduct Authority, which has since opened an investigation into Numis’ dealings with THG.
THG is responding to questions from the FCA in relation to this specific self-referral by Numis. In addition, according to British newspaper reports, THG wants to prove that certain financial institutions colluded to drive down the group’s share price.
Although the IPO made Moulding a billionaire — he and his wife Jodie were worth 2.14 billion pounds in 2021, compared with 960 million pounds pre-IPO, according to The Sunday Times of London Rich List — he’s not exactly been laughing his way to the bank.
During an onstage conversation at the GQ Heroes annual event last November, Moulding said he regretted listing THG in London, saying the experience “has just sucked from start to finish.” He also likened short sellers to bank robbers.
Through it all, THG’s revenues have continued to rise in the double digits, and while the company remains loss-making, it is profitable at an EBITDA level. In the third quarter ended Sept. 30 group revenue was 507.8 million pounds, 94 percent higher than the corresponding period in 2019, at constant currency.
Much of that growth has come through acquisitions: Since listing on the London Stock Exchange in 2020, THG has purchased companies including Cult Beauty, Dermstore.com, Perricone MD and nutrition bar-maker Brighter Foods.
Last May, it welcomed SoftBank as an investor in THG plc, and the Japanese company has the option of investing $1.6 billion for a 19.9 percent stake in THG Ingenuity. SoftBank managing director Dr. Andreas Hansson has become a member of the board of THG plc.
There is no doubt that 2022 will be a year of change: Moulding plans to give up his “golden share,” offering THG the chance to achieve a premium listing on the stock exchange and attract blue chip investors. And while Moulding plans to stay on as CEO, he’ll relinquish his chairman’s role. THG said it has already begun the process of appointing an independent non-executive chair.
THG also plans to make its portfolio more transparent so that investors know exactly how much money each division generates. It will seek a separate market listing for the beauty division, but it has not yet decided what to do with its other subsidiaries, such as nutrition and Ingenuity.
A spokesman said there are no plans to divest those holdings, and THG is committed to remaining long term, majority shareholders in all its business units regardless of what form they ultimately take.
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