RE: THe Times13 Nov 2021 21:32
The case was filed in Kentucky in July last year, two months before THG floated on the stock market at a value of £5.4 billion. Governance quirks — including Moulding’s insistence that he keep a “golden share” giving him greater voting rights than other investors for three years — meant THG was disqualified from a premium listing, under which it would have entered the FTSE 100 index. Even with a less prestigious standard listing, THG’s shares shot up by 30 per cent on their first day of trading. It was initially hailed as proof that the London market could attract dynamic tech ventures of the kind found on New York’s exchanges.
A year later, THG’s shares crashed amid governance concerns and doubts over lofty promises made about Ingenuity, its e-commerce platform. The Analyst, a research firm, pointed out that very few third-party customers, such as Hotel Chocolat and L’Occitane, actually used Ingenuity as their main e-commerce partner. It said that despite the hype, the “most exciting” part of Ingenuity accounted for just 2 per cent of THG’s annual sales. At the time of The Analyst’s note, THG shares were trading at about £5. They have since tumbled past The Analyst’s target of £2.60 and closed on Friday at £1.91, valuing THG at £2.4 billion.
Moulding, 49, accepted an £830 million share-based bonus after THG’s market capitalisation stayed above the £7.25 billion mark for a certain period before collapsing. It was promised to him by previous backers such as private equity firm KKR, which sold its entire holding at the float, although it will be funded via the dilution of plc shareholders. Moulding has moved to shake off governance concerns, unwinding a £100 million loan pledge against his stake and promising to relinquish his golden share.
Last weekend, he told GQ magazine that being listed had “just sucked from start to finish”. Moulding blamed THG’s share-price slide on “aggressive” short-sellers, whom he compared to bank robbers. He said the stress of going public had sometimes left him making phone calls in the early hours of the morning while lying on the floor like a “starfish”.
THG has four divisions. Beauty, which includes THG’s own brands and websites such as Lookfantastic, accounts for about 48 per cent of sales. Nutrition, which includes Myprotein powder, brings in 34 per cent. Ingenuity accounts for just 9 per cent. The remaining 9 per cent comes from personalisation services — for example, THG lets customers put their own text on tins of Quality Street — and the operation of venues such as Hale Country Club in Altrincham, Cheshire.
THG turned over £1.6 billion last year and made underlying profits of £151 million, although it recorded negative cashflow of £208 million as it invested heavily.
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