Matthew Moulding, the founder and chief executive of The Hut Group, is giving up his “golden” share of the company in an attempt to regain the confidence of the City after a sharp fall share in recent weeks.
The online retailer and tech services company said the cancellation of Moulding’s controlling share would promote “good corporate governance”, na a turbulent few weeks for the retailer’s stock price sparked by questions over its profitability, share structure and valuation.
The Manchester-based group – which owns the online retail sites Lookfantastic, Glossybox, Zavvi and Coggles, as well as beauty brands including ESPA and Illamasqua – said the move would also help it apply for a premium listing in London, which it hopes to secure in 2022. Under current rules, Moulding’s golden share prevents a premium listing and therefore THG cannot be included in the FTSE.
“After the anniversary of our 2020 listing we feel that the time is right to make this next step and apply to the premium segment in 2022, thereby continuing the development of THG as we endeavour to deliver our strategy for the benefit of our shareholders, key stakeholders and employees,” Moulding said.
Moulding’s controlling share was originally meant to give him ultimate control of the THG for up to three years, after it first floated on the London Stock Exchange in September 2020 with a £5.4bn valuation. The removal of the dual-class share structure is likely to appeal to investors whose holdings have significantly dropped in value in recent weeks.
Shares in THG jumped 8% to 312p on Monday morning after the announcement, giving it a market value of £3.5bn. Despite the rise, shares were still more than 50% lower than in early September.
Shares in THG, which also owns the sports nutrition brand Myprotein, have more than halved in price over the past month, since it revealed its finances for the first half of the year and announced plans to separate out its technology division from its beauty and nutrition arm.
There has been little detail about the profitability of THG’s divisions, which are being constantly added to through acquisitions, prompting analysts to raise concerns about the company’s underlying profit growth.
A botched investor update last week also raised fears that support from one of its key investors, Japanese investment giant Softbank, was cooling. It came as an independent research provider, The Analyst, released a report expressing concern over the tech arm’s prospects – despite the fact that the division, known as Ingenuity, played an important role in attracting investment from Softbank in May.