Member Info for Kando

"Sadly Mr here’shopin the stock market has not revalued the business up of late and I don’t think will ever again value it correctly. "
"just saying private market / corporates will value it correctly but the spooky public market sadly has not and will not. Hence why it will go private, sadly. "

Sorry commonsense, but for the second time, sadly, you don't seem to sadly know what you are talking about, sadly.

It's very unlikely to be taken private for anything less than £12 per share, and well it shouldn't be. Moulding's golden share will shield us from hostile takeovers for another 18 months and by then, the market will have outlasted this risk-off sentiment and be willing to price aggressive growth stocks with a very clear competitive advantage more generously again. You're talking as if this is end of capitalism as we knew it, or some pernicious characteristic unique to the lse. Have growth and tech stocks not been hammered in New York then? You're the embodiment of peak fear. You'd be saying the same thing about Amazon when it dropped to 6p in 2001 - "sadly Amazon will never be valued appropriately again and sadly it will be taken private sadly. Sadly Bezos will have to sell."

Any press is good press.

In spite of the language dripping with animosity, the facts are still presented; growing capacity, growing revenues, international ambitions. It's all good. Free marketing.

It's fairly comical now, they just hate him so much. A wholly positive announcement morphed, with no rationale, into a frenzied hit-piece.

Expanding capacity to service more clients? What a monster!

Bizarre.

Actually THG is much more like Frasers in 2008, as I've posted before. Dropped from 300p at IPO to 32p 18 months later,
under constant siege in the press and, as ashley claimed at the time, under coordinated attack from shorters (sounds familiar right?), before it finally bottomed out at peak FUD in the financial crisis. The share price went on to recover to over 900p in a 5 year rally from 09-14, rising throughout what was, at the time, a recession and otherwise hard times.

Why he thinks it's more like the post-brexit vote dip Frasers suffered is anyone's guess. The share price movements then were different, the macroeconomic landscape is far more like 08 (but a wholly different set of challenges in reality) than 2017. Right stock comparison, wrong time comparison. 70p here last month was the same percentage fall that dropped Frasers to 32p. Frasers 07-08 appears to track far more closely to the path THG has just taken. Arguably the market today is in peak FUD, it's hard to threaten more than impending recessions, nuclear war, food shortages, an energy crisis and a pandemic dragging on in the factory of the world. One or all of those threats will ease soon and over time, but now, the market is pricing in peak fear of everything. It's far more likely getting to get better, not worse.

Indeed, it was hard not to get carried away with his exuberance.

Today he admits (né brags) that he owns 1/280th of McColls (the equivalent of 5 stores out of 1400). So at current market cap of 3m his current holding amounts to at least £10,700 at current the current 1p sp, but, since he's been spamming "strong buy" posts since 2p yesterday, it's safe to assume his average is much higher and that his actual book cost might be closer to 20k. Which is slightly more than the 5k he professed to hold yesterday. Either way, he's gone in very heavy on a de facto insolvent company whose own leadership claims their very best case scenario to receive emergency funding would completely wipe out shareholders. There's something very Alan Partridge about Chad. I'm sure he'll be back in here soon boasting of his 9p gains off a 30p upswing.

Yes he still has his golden share, and thankfully will have it for another 18 months (3 years from IPO). So THG is immune to hostile takeovers and the share price has plenty of time to weather this year's macro headwinds and realize something closer to true value.

They can't afford to buy THG. They have over 5bn in debt, and only 3.5bn in cash. It'd take more than their resources to acquire THG.

Or neither Okehurst, as is most likely. The company has no liquidity problems. It has no need to sell off any part. The debt is small and long dated. The vast majority of it maturing in 5 years or longer. Plenty of further borrowing capacity. And that is secondary to the fact that there's enough cash in the bank to pay for another 3 years of operations at current (2021) cashburn rate - which hopefully, will narrow year on year going forward anyway as they edge towards profitability.

Sorry Commonsense5, but you don't seem to understand what you're talking about. There's no sadly this, or sadly that. All your inferences are disconnected from meaning, and at best, show a superficial understanding of how the stock market, more broadly, works. Regarding THG, you mostly don't seem to understand who and what owns the vast majority of this stock, nor the relevance and usefulness of a golden share to fend off unwelcome takeovers.

PIs do not own much of this stock, and even if a minority of day traders like you among them would prefer a quick double up via a takeover, the majority of the stock is held by insiders and institutions who will hold at least until their estimation of value is realized.

From your posts, you want a quick return - in 6 weeks even, and you'll probably get it, without any further bid interest, but you'll similarly be selling far too early and leaving a lot of value on the table if you're out at 200p.

I think THG have a very sizeable moat, with many ways yet to increase margins on top of the revenue growth.
Once the distribution network is more complete, I imagine they will work towards their own local delivery network, operating, at least at first, in high density, cost effective areas around their distribution centres. More or less how Amazon eased into it. Cities first, towns later. It ultimately costs a lot to ship via Royal Mail or their international equivalent, especially in the volumes THG require - between £2.50 and £6 per for, what I estimate to be, THG's average UK parcel size/weight. Employing your own drivers on compact delivery routes in cities for say £25 an hour all-in, fuel and wages, and getting them up to Royal Mail's union-agreed standard for parcel-only delivery of around 20 drops per hour - then it would be £25 to deliver what would otherwise cost *up to* £120 to send with another courier. This would drastically reduce delivery costs the more that delivery network is expanded. There's a reason Amazon did it. THG may one day operate at a scale where it becomes economical for them to invest in it too, at which point their margins grow and their competitive advantages increase yet further.

I'm quite happy for Matt to keep batting away offers of anything less than 12. Looking out towards a 6 year horizon, I think the company can quite easily be worth more than that, in fact, closer to 2x that (circa 30bn mcap). So in lieu of future potential, personally, I wouldn't take much less than 12 pounds today and not feel like I'd given my shares away too easily. With continued revenue growth, especially in the high margin sector Ingenuity operates (see: shopify's $200bn mcap last year on 4bn revenues) and markets more generally getting some of their mojo back (bear markets aren't usually permanent), I think PE would be getting the company far too cheap for anything less than 12 per share in 2022. We all know why the share price is where it is today: last year's communications disaster; this year's inflation and political instability - but these things will resolve and the market will value high growth, high margin stocks again, eventually. It won't stay defensively oriented forever. THG is growing, and it's growing quickly, in an otherwise harsh environment for retail. It clearly has a competitive advantage. Once the headwinds ease, it will be priced commensurate with that impressive hardiness of growth. The buzz around PE, however, will do a great job at mending the share price in the short term, so I don't mind it. It gives the market a cue as to how to more accurately value the business - if it's clear many people are willing to pay a lot more for it. I just don't expect or want Moulding to lose faith and give it to them for anything less than it's worth.

Wow, think you're about to regret that Bantham. What a time to sell.

I would guess that 2m trade was probably materially transacted in that 3 hour window in the morning where the price was pinned around 90p. It won't have been one single trade at close, but a managed trade between two institutions with many smaller transactions to keep the price static and not allow it to get driven up by the volume.

Except for that. Shouldn't need reminding (since it was only a month ago) that they just appointed a non-executive chairman. Why would anyone do that to then take it private 28 days later?

Will you two bores give it a rest already.

Brill, thank you!

Just doing a bit of a deep dive on the potential for the company in the US. Does anyone know the actual extent of THG's current fulfilment capacity in the US? Reading the deal Ingenuity signed with Hotel Chocolat in 2020:

"The chocolatier will gain access to the full suite of services offered by THG Ingenuity as part of the partnership. The agreement will launch Hotel Chocolat's direct to consumer (DTC) offering in the USA.

Ingenuity will provide its platform to Hotel Chocolat, as well as digital brand services, and a complete fulfilment solution including chilled storage distribution. The US cocoa and chocolate market is set to reach a value of $67.22 billion by 2025, so Hotel Chocolat hopes the new partnership will help its positioning to meet increased demand.

The full range of services provided to the retailer are as follows: A proprietary end-to-end platform with integrated solutions; the use of THG fulfilment centres across the USA; in-house digital marketing services; a fraud prevention platform; and international customer service with translation options and communication across platforms."

It's offering HC "full use of THG fulfilment centres across the USA" which will facilitate a "complete fulfilment solution including chilled storage distribution." All this to help hotel Chocolat break into the lucrative US market... which is great if THG has the reach to do that. I'm just curious as to the current and future extent of THG's footprint on the continent to try to assess future growth potential there.

It's just a bit unclear as to what capacity THG actually has there, or did have, in 2020 when it signed the deal. Is it as yet unbuilt capacity? I can't yet find any obviously THG branded assets there. THG have pledged to expand capacity by 3.6 million sq ft in "major global locations" - https://www.retail-insight-network.com/news/thg-fulfilment-capacity/ but those locations aren't listed. For the servicing of Hotel Chocolat's needs is it initially capacity they acquired from the purchase of Dermstore, and can that capacity be used for all THG brands and Ingenuity clients?

It is curious how 5 week old anonymous comments on social media (on a page with an obviously anti-corporate agenda - justly or otherwise) are being dredged up and presented as current and relevant news. Doesn't quite seem like that would be up to any journalistic standard. It says nothing about the current state of the company and what little it does say is entirely anecdotal and unsubstantiated.

It says something when even the Daily Mail's article is more balanced and appropriately sourced.

The last trading update already gave all the guidance for the full year. There shouldn't be any surprises on results as the numbers are already all out there. Afterall, that is why the share price is where it is, it dropped when it priced the new downgraded guidance in. I would imagine it might struggle to price in what it's already priced in. It's Q1 that's of interest to the market, and I have reason to think that update will be good, though I cannot share why.

Agree with others here. It seems like a fairly hacky and ultimately toothless article. No sources beyond disgruntled former employees (sad 'n all, but quelle surprise? You've got to break some eggs if you want to make an omelette) coupled with some words selectively quoted from an unpublished email stripped entirely of context. The most triumphant, flattering email ever written could include the phrase "hardest decision" and something about being "exhausted to the bone" having spent years building the enterprise. It doesn't mean she quit because of the merger, nor that she was even unhappy - her public statements on her departure contradict this implication:

(the sale to THG, formerly known as The Hut Group, was) “a seminal milestone in the company’s history. I am excited to watch the next chapter for the business as it grows from strength to strength in its superb position as part of the THG Beauty portfolio.”
She added that Cult Beauty’s brand and mission “continues as a powerful stand-alone business, powered by THG Ingenuity, to spearhead further international expansion and technical innovation.”

Inge said going forward she plans to spend more time with her family, and map out her next moves.
“Growing and scaling a global business for 15 years has been exhilarating, deeply enriching and completely all-consuming. I’m at a juncture where I have the opportunity to prioritize other aspects of my life, a privilege I take with great pride and gratitude. I’m taking a well-earned year off to spend time with my young family, to recharge my creative spirit and let the ideas percolate for my next (ad)venture. Watch this space,” she said.