RE: THG Studios6 Apr 2023 05:34
Ondemand closing in itself is good news to bottom line as it must have been losing many many 10s of millions of pounds (scary that it was allowed to do this since IPO!!)
What isnt good news is that is shows THG is clearly in a critical position. there are now absolutely no job vacancies . as of yesterday they all disappeared. pre that they had 500-600 open vacancies. the need for these jobs cant have just disappeared and we cant say the ondemand redundancies will cover as some jobs were chefs or logistic people or based in new york etc.
I now fear deeply for what the results will bring and the forward statement, and now understand why shorts have been building. even the reduction yesterday was a joke, as it was just what the same shorts bought the day before, but it allowed them to drop the SP from 69p to 63p.
I believe nutrition is a good business, with decent offline snacking ranges being developed internationally, and the iceland franchise deal clever. Whilst it has limited pricing power, as shown through the high discounting and also very very low sales growth (2% in 2022), I believe this will show solid growth in Q1 plus good bottom line (i expect 15% ebitda from this division)
Beauty concerns me. they bought Dermstore and Cult at high of the market valuations (I expect high intangible asset write downs affecting the enterprise value of the company). Beauty is underperforming as consumers go back to high street as shown by the -9% drop in Q4 /22 vs '21. this is a massive miss and cannot be explained just by postal strikes. its due to losing shoppers. I also worry that Sephora, backed by LVMH, will take LF market share quickly as it is more omni -channel.
For ingenuity, I worry again. If they cant make their own D2C websites like Zavvi, probike etc work, then it is clear why thye didnt make the smaller client ones work, hence why many left to go back to shopify or others, or just cancelled them. clearly no whales have been landed, as the lose lips culture at the company would have mentioend, and on lose lips, it does seem boots walked at the final hurdle, so mould will need to row back on the 1bn GMV.
The autostore partnership is exciting but until we hear of clients signing up, I will treat as moulding hyperbole as autostore have many partners to ofer services to many clients so doesnt seem to be too much of a problem to solve.
the pivot made by Vivek is interesting and i buy into it. no one can be worse than Gallemore who I blame for much of the hyperbole (on analyst calls), missed guidance to city (he as CFO - buck rests with him) and he general rubbish comms style. thank goodness he is gone from a visible role, and I hope is removed as a board member soon.
the THG business model was built for growth that hasnt come, they now need to make more efficient, but will become smaller in revenue. the hope is topline improves fast and they generate cash, as they have 1/2 a billion debt plus the 156m overdraft vs only 300m cash
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