THG shares have dropped slightly today following publication of the group’s FY results, just 24 hours after they had soared over 40 per cent on the news of a buyout approach.
Revenue for the financial year to December 31, 2022, increased 2.7 per cent to £2,239.2m, but the results revealed an operating loss of £495.6m, impacted by the non-cash impairment of £275.4m, and non-recurring costs which the company claims will continue to reduce.
The costs include £32.4m relating to its strategic review, stock provision and other associated costs, £18.5m of international delivery costs caused by challenges to normal delivery routes, particularly in Asia, and exceptional costs associated with Covid-19. The company also cited £14.8m of administrative costs and £3.6m of distribution costs relating to the commissioning of purpose-built new fulfillment facilities.
The results also revealed that first quarter sales dropped 8.6 per cent to £496.4m in the three months to 31 March, which was a largely planned outcome as a result of prioritising higher margin sales, while adjusted EBITDA pre-SaaS costs more than halved to £74.3m last year from £161.3m in 2021.
Chief executive Matthew Moulding said: “While FY 2022 adjusted EBITDA was not where we planned at the start of the year, this was largely the result of our strategy to minimise the impact of inflation upon our customer base.
“This investment in their retention, and longer-term growth, was the principle driver behind the reduction in gross margin.
“The challenging macro and inflationary environment required decisive action across the business with around £100 million of efficiency savings delivered. A much-improved outlook on many key cost inputs gives us confidence in an improved financial performance as the year progresses.”
Shares in THG had jumped from 63p to around 95p on Monday after it revealed it had received a “highly preliminary” buyout proposal from Apollo Global Management. The latest news saw them settle back down to 89p on Monday morning.
