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Pour a bit of Beauty Works Argan serum into the sink. Stir in some Espa optimal skin moisturiser, give it a squirt of Perricone MD citrus brightening cleanser and add some whey protein powder. Mix it all together and splash it over your face. You couldn’t make a bigger mess than The Hut Group (THG), retailer of these products and more, has made of its London listing.
The governance-lite online beauty and healthcare empire was brought to market by no fewer than eight investment banks in September last year with a full embassy’s worth of red flags flying. Founder Matt Moulding was chairman, chief executive and landlord, with a “golden share” giving him ultimate control. Moulding had a £100 million personal loan secured against his shareholding. Former finance director Darren Rajanah, criticised by a judge for his part in a 2010 fraud that derailed a previous float plan, still held a senior role at THG’s Ocado-like tech platform, Ingenuity (he still does). Moulding hadn’t even wanted to go public: he told me in 2018 that he controlled THG “at every level” and “if you’re listed, you can’t easily maintain that”. But he was persuaded to do it by backers such as private equity giant KKR, which wanted liquidity.
THG’s governance no-nos meant it was barred from a premium listing, which would have qualified it for entry to the FTSE indices. It had to settle for a standard one. Despite its quirks, and without the support of index-tracking funds, THG’s market value quickly shot up from £5.4 billion to more than £7.25 billion. Staying above that milestone for a short time unlocked an £830 million share-based bonus for Moulding, promised to him on the risible basis that he’d had to sell down his founding stake over the years to take outside investment and grow the business. That’s supposed to be how start-ups work. But for some reason, Moulding and backers decided he deserved special compensation.
Since then, THG’s share price has collapsed as investors have belatedly been spooked by its shonky governance and doubts raised over the Ingenuity platform by research firm The Analyst. To say that this was always highly likely is not hindsight: our Tipster column stuck “avoid” on the stock shortly after its float and Clive Black of the broker Shore Capital told us that “the flashing lights are there”. But the City, as ever driven by momentum, ignored them.
Sentiment has turned with a vengeance and THG is now stuck in a feedback loop where everything Moulding says sends the shares crashing. Cack-handed market updates on Ingenuity (tagline: making complex simple), replete with incomprehensible Brass Eye-style graphics, have made the situation worse. So Moulding, 49, is rushing around surrendering the governance opt-outs he insisted were so important to him a year ago, promising to relinquish his golden share and find an independent chairman. He has unwound the £100 million loan pledge.
Whoever runs Corcel's Twitter just jumped in on a Twitter shareholder chat group with the following..
"All, hope you are doing well. Please do submit any questions for tomorrow's Q&A. We will answer anything we can that doesn't clearly belong in an RNS! Also we are planning a "in-person" meet up in November, now that these things are being allowed again, and we look forward to catching up with investors in person. More details to follow."
Thanks AA/ CO,
The pipeline/ potential does seem very compelling (what attracted me in first place - have been watching it for a while), but I can see that a lot are holding onto some significant red here! Not a big position for me and defo in the speculative column.. Good to luck to all.
Just started a position in 4D. Should I have?!!
Morning all, I'm not an SH, but I am a customer (S&S ISA) and I wondered if anyone else is, and what's your recent experience of the platform? Since they moved to 'live pricing' (which seems anything but!), it's a mess and the only time it's accurate is after 17:00 each day. Apols for posting on this board, but just wanted to know if anyone else feels the same?
Hope so! I've been in and out of ASOS for 3/4 years and was left holding a bit of a pup with the recent drop(s). I do believe in this business though, and have been watching price closely last few days and the Director buy in was a positive, so finally bit the bullet this morning to average down and bring my b/e point back to a more doable level in the short/ medium term. A good CEO appointment would be nice in the next few weeks.