NASDAQ and FTSE string blue at opening, THG no morning drop, feels like good sentiment after Alibaba news yesterday and bank run fears subside as the days go by.
The Macro is not out of the woods but the general feeling around in the media is that the BOE will pause rates after the latest rise and hopefully things will start to cool down on the inflation front as we run up to April results.
Feeling positive.
News just in that Alibaba is splitting up the group into a number of stand alone divisions and each will look to IPO.
Shares already up 7.5% ahead of the US opening.
Interesting to see given the chats around THG/separation etc.
Stock - We will see how the pricing 'brand protection' plays out.
Trouble is I understand your sentiment and can accept this strategy only on the basis there is meaningful revenue growth. Unfortunately as per the last 4 trading updates MM and co have wildly missed their own forecast on this.
The market will be supportive of growth at lower margins but THG can cut in both ways and have low growth and price protection, just does'nt work.
Significant cost cutting and genuine efficiency savings can be argued to offset the above but again the market would like to see the Ingenuity CAPEX reinvested in Protein and Beauty, which if they had done so over the last year may have resulted in an addition acquisition or two or better organic growth.
I have seen many times companies chasing the next 'shiny thing' (Ingenuity), at the determent to what makes them a great company which is the core, bread and butter 'what THG are famous for' Nutrition and Beauty offerings.
Added to that spa's and other divergent mini projects it starts to create the impression that the company is not focussed and at home in their own skin, critics may even say they don't believe they can grow the nutrition or beauty offering any further behind closed boardroom doors....
I HOPE that all the above is resolved in the April update and we see a 'back to basics' approach to the business OR relisting of one or more divisions OR a change of CEO or any combination.
If April is a dull update with flat growth and little strategic change in direction I honestly cant see anything happening to this share but back to the 40's until September until predators circle for a mega cheap deal by which time the current shareholders may be so tired of the status quo they may just accept something to close their positions.
Manc - I don't think all shoppers look for value, its all about brand perception and what the buyer 'feels' they are getting and how they think about the company they are buying from.
For example, Tesco sells own brand paracetamol and ibuprofen for 50p but the exact same branded product on the shelf next to it, that contains exactly the same ingredients sells for £2+
You can buy carrots at Waitrose for twice the cost of Aldi but Waitrose is still in business. You used to be able to buy supermarket own brand beer, in that example I don't think that you can anymore which shows that customers were not buying on price but on brand.
Has been that way for years and clearly people still pay a huge premium because they 'trust' the named brands.
This is where THG needs to be and I don't think MM has really achieved this by keeping his pricing to customers so low, this would indicate to me the THG brand is not as strong as he thinks and the whole market is price driven.
Racing to the bottom in any industry is always a disaster, companies who carry out this strategy are basically hoping the competitors will eventually go bust so they can take that market share.
I was thinking exactly the same thing this morning Kando. The idea of a hedge fund is to make money?!?
No wonder most people view them a parasites dragging down share prices unnecessarily then not taking the profit by buying back?! Absolute madness which cements my view its very largely algo driven and they look at the big picture which I am assuming shows they are in the green on their short portfolio, computer says yes.
At some point you would assume they will close out if the SP drives significantly higher and stays there, surely someone must be the artificial intelligence overseer?
All,
See below from HMRC:
Carry forward a capital loss
If your company has capital losses that are not used against capital gains in the same accounting period, they are carried forward and have to be deducted from later capital gains. Your company can only set these losses against later capital gains. In some circumstances, for example when a company joins another group, the use of carried forward capital losses may be restricted.
That's exactly the point Goodtime.
An acquirer would basically have all the net profit up to the tune of £2bn threshold in the bank, at 25% that's a £500 million bonus.
See excerpt from HMRC website:
Carry forward a trading loss
Your company can carry trading losses forward to deduct from profits of future accounting periods as long as the trade continues.
If your company is using a carried forward trading loss in an accounting period that ends before 1 April 2017, you can only use the relief against profits of the same trade.
Where your company is using a carried forward trading loss in an accounting period that starts on or after 1 April 2017, the situation depends on when your company made the loss in question. If your company made the loss:
before 1 April 2017, it can only be used against profits of the same trade
on or after 1 April 2017, it can normally be used against your company’s total profits
There are special rules for accounting periods that start before and end on or after 1 April 2017.
If your company is part of a group and has carried forward trading losses made on or after 1 April 2017, other companies in the group may be able to use those losses. This is called group relief for carried forward losses.
That's exactly the point Goodtime.
An acquirer would basically have all the net profit up to the tune of £2bn threshold in the bank, at 25% that's a £500 million bonus.
See excerpt from HMRC website:
Carry forward a trading loss
Your company can carry trading losses forward to deduct from profits of future accounting periods as long as the trade continues.
If your company is using a carried forward trading loss in an accounting period that ends before 1 April 2017, you can only use the relief against profits of the same trade.
Where your company is using a carried forward trading loss in an accounting period that starts on or after 1 April 2017, the situation depends on when your company made the loss in question. If your company made the loss:
before 1 April 2017, it can only be used against profits of the same trade
on or after 1 April 2017, it can normally be used against your company’s total profits
There are special rules for accounting periods that start before and end on or after 1 April 2017.
If your company is part of a group and has carried forward trading losses made on or after 1 April 2017, other companies in the group may be able to use those losses. This is called group relief for carried forward losses.
37.5p STE in 2020.
So a 500% increase in SP from lows and now 56% above listing SP.
That would put THG at back to nearly £8 per share on the listing vs current sp metrics!!!
Its all possible so hope springs eternal...
Licker - absolutely agree its all about sentiment and communication.
MM is so underequipped and under experienced to run a PLC, granted as many posters have said here he is clearly a very talented entrepreneur.
If THG had a seasoned, market savvy CEO in place sending the right messages and setting out the right strategy to the market we would be at £5 in a blink of an eye.
The closer we get to April results the less likely IMO the 'dump' side will happen and the rises hopefully hold.
Then when we do hear the April announcements (or not) and the positive results (or not) then we should all be 100% certain that this will either dump then or fly over £1.00 with a steady rise to £1.70 then in July we should all not be surprised to see a capital event at £2.50+
That's what my herbal tealeaves says anyway....
A senior Bank of England policymaker has expressed concern that UK companies could be exploiting the cost of living crisis to push through inflation-busting price increases – a phenomenon widely known as “greedflation”.
Catherine Mann, one of the nine members of Threadneedle Street’s monetary policy committee, said she was concerned about the ability of firms to take advantage of consumer willingness to tolerate higher prices.
In an interview with Bloomberg, Mann said the pricing power of companies meant bringing down the UK’s annual inflation rate to its 2% target would require interest rates to rise further from their current 4% level.