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THG warns cost pressure will result in flat earnings this year – Reuters.com

Signage is seen on a THG warehouse building in Manchester, Britain, January 18, 2022. REUTERS/Phil Noble

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  • Says approaches undervalued group
  • Warns 2022 earnings will be 22% below market expectations
  • Margins will be squeezed by absorbing cost pressures
  • Shares rise as much as 22%

LONDON, April 21 (Reuters) – British e-commerce company THG (THG.L) said it had rejected “numerous” bid approaches that failed to reflect its value as it warned inflationary pressure would result in broadly flat earnings this year, missing market forecasts by 22%.

THG, which has seen its shares plummet 88% in the last 12 months, said on Thursday it had received indicative proposals from several parties in recent weeks.

“The board has concluded that each and every proposal to date has been unacceptable, failing to reflect the fair value of the group, and confirms that THG is not currently in receipt of any approaches,” Chief Executive Matthew Moulding said.

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He said some parties had put forward multiple proposals.

“All I’m particularly focused on is the best for THG and our wider stakeholders, and so what we will look at is what environment is the best environment and share register to get the very best for THG,” he told analysts on a call that was later made available on its website.

He declined to elaborate on whether the “best environment” referred to public or private ownership.

In November, Moulding hinted in an interview with magazine GQ that he could take THG private, saying the process of floating the business a year earlier “just sucked from start to finish.”

Shares in THG, which has nutrition, beauty and e-commerce platform businesses, fell sharply last autumn after a poorly received investor presentation.

The stock, which was trading at 837 pence as recently as January 2021, rose as much as 22% after the analyst call to 116.5 pence, resulting in a market valuation of 1.42 billion pounds ($1.85 billion).

THG said it was aware of the significant impact of short-term cost inflation on consumers and supply chains alike, and it intended to limit the impact by absorbing some of the pressure.

It said it was seeing cost increases across all of its lines, including whey, a major ingredient in its protein-based nutrition products, although it expected an improvement in the second half.

The group, which last month appointed former ITV chief executive Charles Allen as its first non-executive chair, reported adjusted core earnings of 161 million pounds for 2021.

It said the outcome this year would be “broadly in line” with 2021, with a weighting towards the second half.

Analysts were expecting a rise to 206.1 million pounds, according to a company-compiled consensus.

It said it still expected revenue to grow by 22-25% this year, before an impact of about 1% from Russia and Ukraine.

($1 = 0.7661 pounds)

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Reporting by Paul Sandle Editing by Tomasz Janowski and Mark Potter

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