Alastair Osbourne Times article22 Apr 2022 01:40
He seems to have an issue with MM and as expected a mostly negative take:
"That’s shed connoisseurs for you. They look for value in just about anything, even some ramshackle thing three quarters fallen down. Apparently, they’ve taken a shine to The Hut Group. Or THG, as it’s now known, what with the company name, like its market value, having shrunk rather a lot.
In “recent weeks” its founder boss Matt Moulding has been fielding “indicative proposals from numerous parties”. And presumably not just from him, despite his GQ interview last year when he hinted he could take the business private, stating that life as a listed company had “sucked from start to finish”. So who’s been sniffing around this gem of a lean-to, floated at 500p a share in September 2020? And do they include David Cameron: an expert in both shepherds’ huts and iffy finance via his mate Lex Greensill?
Sadly, Moulding isn’t telling. And neither did he put a price on any of the approaches, except to say that the board, now chaired by Lord Allen of ITV fame, had found “each and every proposal . . . unacceptable”. Still, it had the desired effect. The shares rose 16 per cent to 110p: a jump that, you’d think, had more to do with the takeover talk than the full-year or first-quarter figures.
True, on the face of it, the results weren’t bad. Sales at the self-styled “proprietary technology platform specialising in taking brands direct to consumers” rose 35 per cent last year to £2.18 billion, with pre-tax losses cut from £535 million to £186 million. Customers seem to like THG’s beauty brands, sold through sites including Lookfantastic and Cult Beauty, plus its Myprotein shakes. Seventy-eight per cent are repeat punters, many no doubt seeking to match the Moulding torso sheen.
Even so, THG doesn’t break out how much of this growth is organic. Moulding denies he is buying sales but last year saw £768 million of acquisitions: Dermstore, Bentley Labs and Cult Beauty. Yes, first-quarter sales were up against tough comparatives. But Liberum analysts still reckon all but one percentage point of the group’s 16.3 per cent revenue growth came from new buys, while beauty’s 19 per cent rise included “a 25 per cent contribution from M&A” — so down organically.
Then there’s cash. Net cash from operations fell last year from £76 million to £23 million. And while THG raised £760 million fresh cash, it spent more than that buying new companies and on £189 million capex. As for the £161 million adjusted ebitda, it came with so many adjustments it ended up as a £138 million operating loss. And the year-end net cash position fell from £283 million to £44.4 million.
This year hardly looks bonanza time, either, with inflation kicking in. THG says it’ll take higher input costs on the chin rather than raise prices to customers. That will also cut “adjusted ebitda margins” from 7.4 per cent to about 6 per cent, even if Moulding is promising a “medium-term” return to 9 per cent.
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