THG

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THG has offloaded its unwanted OnDemand business to the division’s management team as part of a strategic review to “simplify and streamline” operations.

After a review of loss-making categories and territories within the OnDemand division, the online group said it had conducted “an extensive market-testing process to secure optimal value for shareholders”.

The trade and assets of THG OnDemand - which include entertainment retailer Zavvi, gifting website I Want One of Those and fast-moving consumer goods retailer Pop in a Box - were sold to a newco led by the exisiting management team and funded by investment firm Gordon Brothers.

The new company will continue to be a client of THG’s Ingenuity platform, with the provision of technology, operational and digital services.

In addition, ProBikeKit, a specialist provider of cycling equipment, was also sold to Frasers Group in the second quarter of 2023.

THG said the combined consideration payable through both transactions was about £4m and the move eliminated a £14.6m EBITDA loss contribution. 

CEO Matthew Moulding added: “Through the years, our incubator division OnDemand has cultivated our talent, technology and trading strategies.

“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.

“We will remain close partners with both the OnDemand management team and Frasers Group through continued Ingenuity services.”

Morning update

Retail sales in the UK have grown by more than expected in June as a spell of sustained sunny weather tempted shoppers to spend more, according to the latest official data.

The Office for National Statistics reported a 0.7% rise last month, following a 0.1% increase in May.

Sales volumes in supermarkets and other food shops - depressed last month as a result of consumers ordering takeaways and eating out during the extra bank holiday - bounced back from -0.4% to a rise of 0.7% in June.

ONS chief economist Grant Fitzner said: “Retail sales grew strongly, with food sales bouncing back from the effects of the extra bank holiday, partly helped by good weather, and department stores and furniture shops also having a strong month.

“However, these were partially offset by falls in fuel, garden centres and clothes shops.

“Growth still fell on an annual basis, but at its slowest rate since the beginning of the Ukraine war.”

BRC CEO Helen Dickinson added: “June’s sunshine gave retail sales growth a boost as customers readied themselves for the summer season, with products in areas such as fashion, skincare and books performing particularly well.

“Nonetheless, consumer confidence remains fragile, and with households feeling the pinch from high inflation and rising interest rates they held back on making big ticket purchases, especially in areas such as electricals.”

Underscoring that fragility, a separate report painted a gloomier picture.

Consumer confidence fell in July as household resilience “collapsed” in the face of worries over rocketing mortgage payments, according to a closely watched survey.

GfK’s consumer confidence index decreased by six points to -30 this morning, with all five categories measured by the data firm also down compared with June.

Consumers have defied the cost-of-living headwinds in the first six months of 2023, despite double-digit inflation outpacing income growth and rising interest rates.

“Suddenly, this resilience has collapsed, resulting in a six-point fall this month in the headline score,” said Joe Staton, client strategy director at GfK.

“There are clear concerns for the coming year for our personal finances and for the wider UK economy, with these measures down six and eight points, respectively.

“The recent fall in headline inflation will do little to improve the financial mood; consumers need to see falling prices and interest rates before that happens. Reality has started to bite and, as people continue to struggle to make ends meet, consumers will pull back from spending, as is clear from the seven-point drop in this month’s measure of major purchase intentions.

“All in all it’s bad news. People are feeling economic pain and this confidence deficit needs to be reversed before the gains this year are lost.”

The FTSE 100 opened down 0.1% to 7,642.27pts after rallying this week.

Shares in THG opened up 1.2% to 108.2p on the update on its strategic review - putting the stock up 131% this year.

Ocado is also up 1.9% to 695.4p this morning, with Greencore among the early risers, up 1.5% to 86.2p.

McBride, Naked Wines and Just Eat Takeaway are down 8% to 31.1p, 2.6% to 75p and 2.1% to 1,327.2p respectively.

Yesterday in the City

The FTSE 100 rally continued, with London’s blue-chip index closing 0.8% higher at 7,646.05pts.

Cake Box soared 6.7% to 160p after the cake retailer responded to media reports on a potential takeover. The group confirmed that Australian asset management firm River Capital had offered 160p a share for the company in June, with the offer rejected.

Premier Foods also had a good day, rising 2% to 130.1p as a Q1 update said profits would be at the top end of the expected range and the group would not put up prices again in 2023.

Other risers included Glanbia, up 2.8% to €13.91, and Greencore, up 2.3% to 84.9p.

Losers included WH Smith, down 1.4% to 1,528p, and Just Eat Takeaway, down 2.9% to 1,355p.