Another ST negative article16 Apr 2022 19:45
Title - "‘Late payments’, staff at ‘breaking point’ — more trouble for THG"
THG has suffered a fresh blow after the founder of one of its leading beauty businesses resigned and brands complained of late payments.
Alexia Inge, co-founder of Cult Beauty, which THG bought for £275 million last year, emailed staff this month to say she was “exhausted to the bone” and would be leaving the company in what was the “hardest decision” of her life.
Cult Beauty is a site that sells skincare, haircare and cosmetics brands such as Charlotte Tilbury and Huda Beauty. When it was bought by THG, formerly The Hut Group, it joined a stable of brands including Lookfantastic, Myprotein, Zavvi and Glossybox.
Current and former staff of Cult Beauty have told The Sunday Times that the firm’s culture had deteriorated since the takeover. “It seems like every week, someone is leaving,” said a current employee. “People are being driven to breaking point, ringing each other up and crying.” The employee added that “brands are not being paid as they used to be”.
The owner of a beauty brand said: “Cult Beauty used to be great at paying on time [60 days], but ever since the THG acquisition, we haven’t been paid once. I’ve been emailing and chasing every week, but no response — I don’t even know if my emails are being read.”
While wishing to remain anonymous due to her ongoing relationship with THG, she added: “Obviously there will be a period of transition with new systems etc being set up, but it’s pretty stressful as we’re a small brand and it’s really affecting our cashflow.” THG’s average payment time is understood to be 60 days.
It is the latest in a string of issues to plague THG since it floated in London in September 2020 to great fanfare with a £5.4 billion value. Despite an early rally after its listing, which triggered an £840 million payday for boss Matt Moulding, the shares have since tumbled amid concerns over governance and profitability. In October, Moulding admitted it had “not been a great day” after the shares fell another 35 per cent following a presentation to shareholders. They closed last week at 93.77p, valuing THG at £1.1 billion.
At the time of the takeover, Cult Beauty had a distribution centre in Harlesden, London, where it shipped orders to customers. That centre was closed this month, with staff being made redundant and distribution moved to THG’s main warehouses.
THG said: “It was logical to merge Cult Beauty’s warehouse operations into our new automated facility in Manchester. We are experienced at integrating acquisitions and in the event any employee is affected, we will provide support.”
A former employee, who left recently, said staff were in “anguish” over the job losses and team morale had fallen since the takeover. However, more than 75 per cent of respondents to a staff engagement survey last October said they were proud to work at THG.
Sign In
Follow the stocks
