Shares of THG (THG.L) fell 10% on Tuesday after the British e-commerce company warned that its profit margin for the full year would fall short of expectations.
The Manchester-based company, formerly known as The Hut Group, said its earnings before interest, tax, depreciation and amortization (EBITDA) margin would be between 7.4% and 7.7%, below 7.9% expected. This was due to the fluctuating movements of foreign currencies.
The stock plunge means THG’s share price has fallen more than 75% in the year since its initial public offering (IPO) in January 2021.
However, the group still posted its highest ever annual sales of £2.2 billion ($3 billion), thanks to significant growth over the Christmas period and rising demand for beauty products.
The company, which is behind brands such as LookFantastic and Myprotein, sells beauty, skincare and health food products on hundreds of websites worldwide.
He said the new year had “started well”, but pointed to further challenges ahead as he faces tough comparisons to a year ago when the UK was in lockdown. It also faces record commodity prices and the ripple effect on its nutrition division, as well as pandemic-related uncertainty.
Group sales were up 92.4% year on year in the fourth quarter to December 31, while fourth quarter sales were up 27% to £711m, compared to the same period a year ago. one year old.
Meanwhile, revenue from THG’s ingenuity unit soared 135% to £45.4m.
“We are delighted to report significant growth across all divisions during the peak period and to have achieved record annual sales of £2.2 billion,” said Matthew Moulding, Managing Director.
“The new year has started well and we remain confident in delivering on our strategic growth plans in 2022 and beyond.”
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THG believes its sales this year will increase between 22% and 25%, compared to an increase of almost 38% last year.
Since October last year, the company has engaged search firm Russell Reynolds to find an independent non-executive chairman with the aim of moving the company to a premium listing on the London Stock Exchange (LSEG.L).
Russ Mould, Chief Investment Officer at AJ Bell, said: “The only way for THG to regain market favor is to consistently deliver better-than-expected numbers for at least two or three quarters. Unfortunately, its latest update fails the test as it reports that the margins are slightly lower than expected.
“Under normal circumstances, a company showing the level of growth seen in the latest THG update would be applauded by the market.
“Unfortunately, THG has shot itself in the foot through its behavior as a listed company since going public. And that means that only something spectacular will drive the stock price up.