THG shares slump 20% after outlook cut
Despite a 12% rise in revenues at THG, pre-tax profits fell around 60% as the company decided to absorb much of the increase in input costs.
(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.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Act on share opportunities today
Go long or short on thousands of international stocks with spread bets and CFDs.
- Get full exposure for a comparatively small deposit
- Trade on spreads from just 0.1%
- Get greater order book visibility with direct market access
See opportunity on a stock?
Try a risk-free trade in your demo account, and see whether you’re on to something.
- Log in to your demo
- Take your position
- See whether your hunch pays off
See opportunity on a stock?
Don’t miss your chance – upgrade to a live account to take advantage.
- Trade a huge range of popular stocks
- Analyse and deal seamlessly on fast, intuitive charts
- See and react to breaking news in-platform
See opportunity on a stock?
Don’t miss your chance. Log in to take advantage while conditions prevail.
Live prices on most popular markets
- Equities
- Indices
- Forex
- Commodities
Prices above are subject to our website terms and agreements. Prices are indicative only. All share prices are delayed by at least 15 minutes.
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
