Plans by online retailer THG to win support from shareholders for its strategy backfired spectacularly on Tuesday after an investor day sparked a sell-off that wiped a third from its share price.
The retailer, formerly known as The Hut Group, which is run by its founder Matt Moulding, held a capital markets day, where it shared its 2030 sustainability strategy with investors.
But investors took fright at the update and concerns that Japanese investment giant SoftBank’s support for THG was cooling, driving down its share price almost 35% from Monday’s closing price of 437p, to close at 285p on Tuesday. That wiped £1.85bn from the company’s market value, taking it down to £3.48bn from £5.33bn at the start of the day.
The Manchester-based e-commerce specialist owns a range of online beauty and nutrition brands including Lookfantastic and Myprotein, and is also planning to expand its role as a technology provider, helping brands such as Unilever and Danone to sell directly to consumers.
It has been less than 13 months since THG first floated on the London Stock Exchange in September 2020, with an offer price of 500p a share, which valued the business at £4.5bn.
Moulding, who founded the business in 2004 selling tax-free CDs online and is known for his love of tight T-shirts, became a billionaire after the firm’s flotation and received at least £830m in shares – one of the largest payouts in UK corporate history – after the company’s share price rose in the weeks following its stock market debut.
However, the shine has come off THG in recent weeks and Tuesday’s slide followed weeks of share price falls.
The company’s share price has tumbled by more than half over the past month, since THG revealed its results for the first half of the year and announced plans to separate out its Ingenuity technology division from its beauty and nutrition divisions.
The firm has also come under pressure in recent weeks following a report from independent research provider The Analyst, which expressed concerns about the prospects for THG Ingenuity, and suggested investors short the company’s shares by betting they will fall.
THG Ingenuity, previously described by Moulding as a global retail technology platform, played a key role in attracting investment from Japanese investment giant SoftBank in May.
THG entered into a joint venture with SoftBank, which valued the technology division at $6.3bn (£4.5bn), which is more than the market value of the entire business following Tuesday’s share price slide.
Under the terms of the deal, SoftBank division SB Management bought the option to buy a near 20% stake in THG Ingenuity.
According to analysts who attended THG’s virtual capital markets day, the company said SoftBank would not be exercising this option early, sparking some investor concerns about the future financing of the business.
The Guardian understands that analysts had hoped to receive more information from THG about major clients of its Ingenuity division and more evidence of the success of this part of the business.