THG shares down again as Fitch downgrades rating
Online retail and technology giant THG saw its share price continue to fall Friday morning. With the stock nosediving almost 4% on Thursday, the decline continued on the week’s last day of share trading, initially down a further 2.2% to £86.70 a share before covering slightly by late morning to £87.62.
The fall came as Fitch Ratings revised its long-term Issuer Default Rating (IDR) outlook from ‘positive’ to ‘stable’. Material cost challenges, including logistics, energy and raw material prices, posed concerns, Fitch said.
The credit rating agency added: “We expect increased competition as trading conditions normalise post-pandemic. At the same time further cost pressures will drive continuing profit margin softness in 2022, before improving next year, as well as negative free cash flow (FCF) due to substantial investments.”
Matthew Moulding’s retail empire has seen a near-88% hit to its share price in the past year following a series of negative headlines.
Last month, beauty suppliers were reported to have limited the supply of stock after concerns the retail giant was adding unacceptable discounts to hit sales targets. Beauty brands including Dermalogica were reported to have attempted to protect its prices by limiting supplies to the business.
However, THG slammed reports of the dispute as “media speculation” and said there was “no notifiable reason” for the firm’s plummeting share price after headlines about suppliers.
“Dermalogica has not placed and is not looking to place any restrictions on its trading relationship with THG Beauty, including with regard to the supply of stock,” THG said.
Bosses at THG said they were “not aware” of any key suppliers to THG’s beauty division that have or intend to restrict supply to its beauty division.
THG owns a string of popular beauty websites, including Lookfantastic, Dermstore and Cultbeauty, which have grown rapidly with investment in digital marketing and social media promotion.
The retailer has reportedly been eyed by private equity firms for a buyout, City AM reported. Representatives from Advent International were said to have visited the firm’s Manchester headquarters while LA-based Leonard Green is understood to have also expressed an interest.
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