A Way Forward24 Apr 2026 09:06
The way I’m looking at it is pretty simple: I’m anchoring off the latest THG base of £1,717.9m revenue and £76.6m adjusted EBITDA, which is a 4.5% EBITDA margin, then using an EV/EBITDA valuation method with the earlier working anchor that about £0.9bn EV equates to roughly 58p per share. On that basis, if THG tried to reach £100m, £125m and £150m EBITDA with today’s efficiency unchanged, it would need roughly £2.22bn, £2.78bn and £3.33bn of revenue respectively, which shows how hard it is to grow into those numbers through sales alone at a 4.5% margin. If instead the business becomes more productive, the picture changes materially: at the current FY27 consensus-style 6.4% margin, those same EBITDA outcomes would need only about £1.56bn, £1.95bn and £2.34bn revenue, and at a cleaner 8% margin they would need about £1.25bn, £1.56bn and £1.88bn revenue. So to me the answer is not just “sell more”, it is “sell more while making each pound of revenue worth more”, through a mix of growth in Beauty and Nutrition, tighter central costs, better gross margin, and stronger operational discipline. Using the same valuation logic, £1.70 a share implies an EV of about £2.64bn, which would mean roughly £264m EBITDA at 10x or about £220m EBITDA at 12x; £2.50 a share implies about £3.88bn EV, which would mean roughly £388m EBITDA at 10x or about £323m EBITDA at 12x. So as a long-term holder, my view would be that THG needs to become a much higher-quality, more efficient business rather than just a bigger one: to get near £1.70, it probably needs to prove something like £220m-£260m EBITDA with cleaner margins and lower leverage, and to get near £2.50, it likely needs something more like £320m-£390m EBITDA, which in practice means sustained growth plus a structurally better margin profile than today. The caveat is that this is the boring, pure base fair value measure: these numbers should be treated as a minimum intrinsic floor value framework for the business, not a statement of what the share price should trade at on any given day. In other words, this is the safety blanket, not the target. The actual share price could deserve a significant premium to these numbers if THG demonstrates things the market will pay up for beyond the raw maths, such as a stronger balance sheet, consistently compounding cash generation, a higher-quality and more predictable revenue mix, proof that margin gains are durable rather than cyclical, materially improved governance and capital allocation, a rerating into a better peer group, strategic value in its brands or platform, takeover or break-up optionality, or simply renewed market confidence that the business has moved from recovery into genuine long-term quality.
Sign In
Follow the stocks
