THG has sold two lossmaking businesses for £4mn as part of the ecommerce group’s streamlining effort to reverse lacklustre performance and regain confidence from investors.
The London-listed group said on Friday it sold entertainment products division THG OnDemand to a company led by the unit’s management and funded by investment firm Gordon Brothers. It added that it had also sold cycling equipment retailer ProBikeKit to retailer Frasers Group, controlled by billionaire Mike Ashley, in the second quarter of the year.
“I am delighted to see management and Gordon Brothers continuing the fantastic work of the OnDemand team, and I have no doubt the ProBikeKit business will continue to thrive under Frasers Group,” said chief executive Matthew Moulding.
The sale of the businesses, which made a combined loss of £14.6mn in 2022 in terms of earnings before interest, tax, depreciation and amortisation, comes as the ecommerce company seeks to improve profitability by simplifying its businesses.
Formerly known as The Hut Group, THG sells nutrition and beauty products online through websites including Lookfantastic and Myprotein.
Although it was hailed as a future star of the UK tech industry when it listed with a valuation of £5.4bn in 2020, the company has been through a turbulent period, including several profit warnings and concerns about corporate governance. Its shares have plunged more than 80 per cent since it listed.
THG’s pre-tax losses ballooned to £549.7mn in 2022 from £186.3mn a year before, as management blamed the recent global devaluation of technology businesses as well as inflationary pressures.
There has also been investor concern over the company’s governance. Last month longstanding non-executive director Iain McDonald stepped down from the remuneration committee at the group’s annual meeting after shareholder advisers urged investors to vote against his reappointment.
THG, which confirmed in January that it would undertake a strategic review of lossmaking businesses, ended talks with Apollo in May about a possible takeover, saying the US private equity group’s proposal undervalued the online retailer.
News of the disposals announced on Friday was first reported by Sky News. THG shares were down 3 per cent in morning trading.