THG shares slump 20% after outlook cut

(Video Transcript)

THG H1 numbers

The nutrition and beauty sales company THG Holdings, formerly The Hut Group, has announced this morning that its first half (H1) numbers have been hit really badly because the company has been absorbing the steep rise in input costs.

It really doesn't want to send these on to its end users, the retail customers, because it knows that they will then go elsewhere. So it's sacrificing margin for sales.

THG share price

Let's take a look at what's happened to the share price, because I think this really says it all. What's been happening is that group revenue has risen 12.3% to £1.1 billion, which is a record high. The problem is, it's seen gross profit margins reduced by four percentage points and EBITDA is down from £81 million last year to £36 million this year. This is all as a result of the company absorbing those input costs.

You can see quite clearly the fall that we've seen on the stock here, all the way down to the low point that we've seen in today's trade, which is a record low for the stock, down at 37.5 pence. Now, this is down 18.6% at the moment. It was down as much as 20% out of the gate when we saw trade get underway at the beginning of today's session.

Now, you can see the long-term chart here, from the record highs that we had on the stock at £8.30. It listed at this 500 level, just at early 2020 or mid-2020, and you can see that a number of profit warnings, concerns about sales outlook, and the fact that the company really hasn't been able to get a grip with its base costs have meant we've seen this stock slump all the way down. It's 95.5% off those record highs.

So THG in the news today, for all the wrong reasons.