THG is exploring the demerger of its Ingenuity ecommerce service as part of a broader strategy to enhance shareholder value.
- THG announced a strategic move to potentially separate its Ingenuity service from its other business units.
- The demerger would leave THG with its Beauty and Nutrition sectors, both described as highly profitable.
- Although the demerger is under consideration, the timeline remains uncertain pending further options.
- HMRC has approved tax clearances for the structuring of the possible demerger.
THG, formerly known as The Hut Group, recently announced plans to explore the demerger of its Ingenuity ecommerce service. This initiative is part of a broader strategy aimed at maximising shareholder value, although specific timelines for implementation remain undisclosed.
The proposed demerger would result in THG consisting of its Beauty and Nutrition divisions. Both of these business units are viewed by the company as globally leading, highly profitable, and capable of generating cash flows conducive to paying dividends.
Despite the announcement, THG has not provided a definitive timeframe for the demerger, stating that various options are under consideration. However, it has confirmed that tax structuring clearances have been approved by HMRC, a significant step forward in the planning process.
Any potential demerger is expected to require the approval of shareholders. As a result, THG intends to disseminate further detailed information to stakeholders in the near future to clarify the implications and structure of the proposed change.
THG’s announcement coincided with its interim financial results for the first half of 2024. The company reported a 3.6% year-on-year decline in total revenue, amounting to £934 million. However, it witnessed a 1.6% growth in adjusted EBITDA, reaching £32.6 million.
In related developments, the Frasers Group has agreed to acquire luxury e-tailer Coggles from THG. This transaction will foster a multi-year strategic partnership between the two companies, which includes the integration of Frasers Plus into the Ingenuity platform and the use of THG’s courier services in Australia.
Additionally, THG has recently informed employees of a mandatory return to office work for five days a week. This directive is accompanied by plans for up to 171 redundancies, reflecting ongoing organisational restructuring efforts.
As THG progresses with its demerger considerations, it remains focused on enhancing shareholder value and adapting its business model.
