Shares in the Hut Group hit an all-time low on Tuesday after it emerged that BlackRock was halving its stake in the online retailer after a rocky month for the company.
BlackRock, its largest institutional shareholder, is selling 58m shares priced at 195p each, or a 10.3% discount to the stock’s Monday close, according to bookrunner Goldman Sachs. The deal is valued at £113.1m. The world’s biggest fund manager had a 10.1% stake, or nearly 124m shares, in mid-October according to Refinitiv data.
Shares in the Manchester-based THG, which runs websites including Lookfantastic and Cult Beauty, fell 9% to a record low of 197p on Tuesday, far below the flotation price of 500p in September 2020.
The shares soared to nearly 800p at the start of the year but have slumped in recent months because of concerns about the firm’s governance and the future of the business, after it flagged last week that profit margins would be squeezed by currency changes. Analysts have also pointed to a slowdown in growth at its core beauty division.
“For a while THG was a stock market darling with investors clambering to own the stock in the belief it would play a key role in helping product manufacturers sell direct to consumers. Now it is losing fans at an incredibly rapid rate,” said Russ Mould, the investment director at the stockbroker AJ Bell.
“Asset managers rarely sell after a stock has already fallen so much unless they’ve lost all confidence in the business and/or found something that completely changes the investment case. The backlash against THG seems to centre on the fact that people bought into the hype without paying attention to valuation.
“Now that difficult questions are being asked about costs and more, particularly if the business is broken up into three as per the suggestion from THG, investors aren’t getting the answers they want – or they are not liking what they see.”
The company, which is run by its co-founder and biggest shareholder, Matt Moulding, has tried to calm investor nerves by hiring the headhunter Russell Reynolds to search for a new non-executive chair. Moulding is currently executive chairman and chief executive, which is against best practice according to the corporate governance code.
THG said the appointment of a new chair would help it prepare for a premium listing on the main London Stock Exchange. It currently has a standard listing.
Last week THG also appointed an executive from its Japanese backer SoftBank, Andreas Hansson, as a non-executive director to its board, to dispel any doubts about its relationship with SoftBank, which invested $730m (£530m) in THG this year.
