THG stock continues to struggle despite plans to spin off tech platform and focus on beauty

20 Sep 2024 --- Shares of THG, formerly The Hut Group, have fallen largely this week after the British e-commerce company missed earnings estimates and said it may spin off its technology platform, Ingenuity, to help boost its bottom line. The stock has dropped over 90% since its IPO in 2020.

Demerging Ingenuity would leave THG with its more profitable divisions, THG Beauty and THG Nutrition. The company said it would apply to remain on the London Stock Exchange now that the government has changed the rules to attract more listings. The stock is presently in the “transition” category. 

Beauty beats tech
Ingenuity was launched in 2021 as a separate venture selling e-commerce solutions for retailers with the help of SoftBank, a previous investor in the business. Brands such as Holland & Barrett, L’Oreal and its own Dermstore and Lookfantastic use the tech platform. 

THG states “record first-half adjusted EBITDA across Beauty and Ingenuity help[ed] offset transitory headwinds in Nutrition” but still sees “improving momentum” with the latter. As for Ingenuity, some analysts wonder how it will be funded moving forward, pointing to the “significant” amount of cash it loses every year. 

Adjusted EBITDA rose 3.6% to £48.8 million (US$64.83 million) in the first six months of 2024 from a year earlier, but were below analysts’ predictions.

Total sales also dipped nearly 2% in the group’s nutrition division, which includes Myprotein. THG blamed the “disruption” on a major global rebrand of Myprotein, which affected online prices after creating new packaging.

By Sabine Waldeck