(Alliance News) - THG PLC shares sunk on Tuesday morning despite the beauty products retailer and e-commerce platform provider delivering a strong quarterly performance and outlining steps to improve its corporate governance.
THG shares were down 12% to 269.58 pence each in London on Tuesday morning. That makes their price barely more than half the company's IPO price of 500p per share back in September 2020.
THG, which trades as The Hut Group, reported revenue of GBP507.8 million for the three months to September 30, up 34% from GBP378.1 million last year and up 86% on 2019.
"We have delivered a strong trading performance in the third quarter and enter our peak trading period with confidence," Chief Executive Matthew Moulding said.
"The recent successful migration of Cult Beauty onto the Ingenuity platform is testament to the resilience of the infrastructure and the expertise of our digital talent. In under 10 weeks we have seamlessly migrated Cult Beauty, whilst delivering significant website and customer user-experience improvements at the same time."
Manchester-based THG bought online makeup retailer Cult Beauty in early August for GBP275 million.
Founded in 2008 by Alexia Inge and Jessica DeLuca, Cult Beauty uses an e-commerce platform to stock around 300 independent makeup brands, such as Charlotte Tilbury, Living Proof and Molton Brown.
THG noted logistics problems, labour shortages and product inflation as headwinds which persisted in the third quarter of the year. But the company said its "vertically integrated business model, focus on cost control and increased automation" have largely mitigated these pressures.
Looking ahead, THG said it remains on target to trade "comfortably" ahead of expectations set out at the time of its September 2020 initial public offering. At the time, THG had guided to 2021 revenue growth of between 20% to 25%. For 2021, THG expects acquisitions to contribute GBP260 million to revenue.
Turning to corporate governance, THG has appointed Russell Reynolds Associates to undertake the search for a new independent chair as it seeks to move to the Premium segment of the London Stock Exchange in 2022. Founder Matthew Moulding will cancel his 'golden' share to facilitate the move.
THG also named a Softbank Group Corp executive to its board as a non-executive director. Andreas Hansson, managing director of SB Management, will join the board immediately. Softbank back in May subscribed for USD730 million in THG shares and signed an collaboration and option agreement.
Hansson and Tokyo-based Softbank gave THG a vote of confidence.
"Since our initial investment, the technological capability of Ingenuity has proven compelling for several portfolio companies," Hansson said. "There is a clear need for a global, purpose-built and end-to-end e-commerce platform, we believe that Ingenuity has the right suite of products to serve this market, and we continue to be confident about our investment in THG and the Ingenuity investment opportunity."
By Greg Roxburgh; gregroxburgh@alliancenews.com
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