US Firm Apollo Considers Acquiring THG Amidst Increased Losses and Revenue Growth

  • THG’s operating loss more than doubles to £495.6m in FY22
  • Apollo has until 5:00pm (GMT) on 15 May to make a firm takeover offer for the group
  • Revenues grow by 2.7% to £2.24bn, up from £2.18bn in the prior year
  • Certain loss-making categories and territories under strategic review
  • CEO Matthew Moulding says investment in customer retention led to reduced gross margin

THG, the global digital-first consumer brands group, has reported a significant increase in its operating loss for the financial year ending March 2022, with losses more than doubling to £495.6m. This comes amidst rumors of a potential takeover bid from US private equity firm Apollo. The company attributes these losses to various factors including non-cash impairment, strategic review costs, international delivery expenses, and distribution costs for new fulfilment facilities. Despite the increased losses, THG’s revenues grew by 2.7% to £2.24bn from the previous year, resulting in a two-year sales growth of 38.8%. Apollo has until 5:00pm (GMT) on May 15th to make a firm takeover offer for the group. THG CEO Matthew Moulding commented that the investment in customer retention during this period led to reduced gross margin, but expressed confidence in improved financial performance as the year progresses due to a more favorable macro environment and completion of a major infrastructure programme.

Factuality Level: 8
Factuality Justification: The article provides accurate information about THG’s financial performance, including its operating loss, adjusted EBITDA, revenue growth, and strategic decisions. It also includes quotes from the CEO that offer insight into the company’s strategy and outlook. However, it does contain some subjective language (e.g., ‘hugely proud’) and a potential takeover bid is mentioned without concrete details.
Noise Level: 3
Noise Justification: The article provides relevant information about THG’s financial performance, including its operating loss, adjusted EBITDA, revenue growth, and strategic decisions. It also includes comments from the CEO on the company’s strategy and outlook. However, it could benefit from more in-depth analysis of the factors affecting the business and potential implications for the industry.
Financial Relevance: Yes
Financial Markets Impacted: THG’s operating loss, adjusted EBITDA, and potential takeover bid by Apollo impact financial markets and the company
Financial Rating Justification: The article discusses THG’s financial performance, including its operating loss, adjusted EBITDA, and a possible takeover bid from Apollo. This directly impacts the company’s financial situation and could potentially affect financial markets if the deal goes through.
Presence Of Extreme Event: No
Nature Of Extreme Event: Other
Impact Rating Of The Extreme Event: Minor
Extreme Rating Justification: There is no extreme event mentioned in the article, but the company THG experienced a significant increase in operating loss and adjusted EBITDA that was not as planned. However, this seems to be due to strategic decisions made to prioritize customer retention and growth rather than an unexpected crisis.

Reported publicly: www.retailsector.co.uk