Matthew Molding, founder and managing director of The Hut Group, is giving up his âgoldenâ stake in the company in an attempt to regain the city’s confidence after a sharp drop in shares in recent weeks.
The online retailer and technology services company said the cancellation of Molding’s controlling stake would promote “good corporate governance,” after a few turbulent weeks for the retailer’s share price prompted by questions about its profitability, the structure of its actions and its valuation.
The Manchester-based group – which owns online retail sites Lookfantastic, Glossybox, Zavvi and Coggles, as well as beauty brands like ESPA and Illamasqua – said the move would also help them apply for premium listing at London, which he hopes to obtain. in 2022. Under current rules, Molding Preferred Share prevents premium listing and therefore THG cannot be included in the FTSE.
“After our anniversary of listing in 2020, we believe that the time has come to take this next step and apply for the premium segment in 2022, thus continuing the development of THG as we strive to implement our strategy at benefit our shareholders, key stakeholders and employees, âMolding said.
Molding’s controlling stake was originally intended to give it ultimate control of THG for up to three years, after it floated on the London Stock Exchange in September 2020 at a valuation of Â£ 5.4 billion. The removal of the dual-class equity structure should appeal to investors whose holdings have declined significantly in value in recent weeks.
Shares of THG jumped 8% to 312p on Monday morning after the announcement, giving it a market value of Â£ 3.5 billion. Despite the rise, stocks were still more than 50% below their early September level.
Shares of THG, which also owns sports nutrition brand Myprotein, have more than halved over the past month, since it disclosed its finances for the first half of the year and announced plans to separate its tech division from its beauty and nutrition division. arm.
There have been few details on the profitability of THG’s divisions, which are steadily increased through acquisitions, prompting analysts to worry about the company’s underlying earnings growth.
A botched investor update last week also raised concerns that support from one of its major investors, Japanese investment giant Softbank, was cooling off. It came as independent research provider, The Analyst, released a report expressing concerns about the prospects for the tech industry – despite the fact that the division, known as Ingenuity, has played an important role in attract investment from Softbank in May.