THG shares surge as demand for beauty products holds up and troubled retailer secures £156m banking facility
- THG reported a 2.1% rise in third quarter sales to £518.6m
- Sales of beauty products up 4.9%, nutrition up 2.9%
THG shares surged on Tursday after the online nutrition and beauty retailer said demand for its products remained resilient despite the cost of living crisis.
The company, formerly known as The Hut Group, reported a 2.1 per cent year-on-year rise in third quarter revenues to £518.6million.
Sales of beauty products were up 4.9 per cent in the three months to the end of September, while nutrition products were up 2.9 per cent.
THG said said demand for its products remained resilient despite the cost of living crisis
The group stuck to its full-year guidance, which it had lowered last month, with expectation that sales will rise between 10 and 15 per cent.
Chief executive Matthew Moulding said the quarter had started ‘positively’ and that as easing in commodity prices would help boost margins next year.
‘As cost of living pressures rise, customers are continuing to prioritise beauty, health and wellness categories and, through investing in bringing them into and retaining them within the THG ecosystem, we are laying the foundations for our future growth,’ he added.
THG shares rose more than 16 per cent to 54.2p in afternoon trading on Tuesday. However, they are still 90 per cent below their IPO price of 500p two years ago.
When THG floated in September 2020 it was seen as the darling of the stock market, with shares briefly topping 800p and leaving the company worth almost £10billion.
But it has been hit by a slew of corporate governance concerns and questions about its lofty valuation. It is now valued at around £680million.
The group, which is behind brands including Lookfantastic and Myprotein, said it had signed an ‘incremental’ £156million banking facility ‘on highly attractive terms’.
‘Given the current market environment, this is a strong endorsement of the Group’s long-term business model, alongside the recently announced increased investment from Qatar Investment Authority,’ Moulding added.
Last week, THG’s fourth largest investor, Softbank, said it was selling its 6.4 per cent stake to Moulding and Qatari investors at a heavy discount.
More than 80 per cent of the Japanese conglomerate’s holding was gobbled up by the Qatari sovereign wealth fund.
The rest was bought by Moulding, who already owned a near-15 per cent stake worth £95million.