Shares in THG have rallied to a three-month high after the business revealed earlier this week it returned to growth in Q2.
Leaping 13.3% on 25 June following a trading update, shares in the beauty and nutrition business stabilised at just over 32p thanks to a “much improved” performance. Shares are up almost 25% over the past five days.
THG’s nutrition business delivered an estimated 5%-7% in revenue growth after just 0.1% in Q1, and the firm managed to cut the beauty division’s revenue decline from 9.8% to just 2%-3% thanks to growth in the UK, its largest territory.
Business in THG’s nutrition unit was now growing at its fastest rate since Q1 2022, it said.
US growth is set to be strong, with an anticipated five-fold increase in distribution. THG confirmed it would have less than £1m direct exposure to tariffs, before any mitigating actions.
The spike in share price comes at the tail of more than three years’ difficult trading, as shares collapsed from more than 600p to a low of 37p from late 2022 to 2023, rallying to around 100p in July that year, but slowly bleeding share value ever since.
“THG shares have been poor performers but have seen a relief bounce the past month, and the Q2 update provides some relief,” said Wayne Brown, research analyst for Panmure Liberum.
While Brown expected tailwinds in H2, he added it would be hard to move to a ‘buy’ stance until the company delivered sustainable margins and “a level of profits commensurate with a business generating c£1.8bn of revenue”.
Jefferies saw the return to growth as the signal of THG’s changing fortunes. The firm said THG would “demonstrate its underlying potential” in FY26 and would be a “template for future years” as strong growth in store openings.
John Stevenson, analyst at house broker Peel Hunt, said he valued THG’s beauty and nutrition divisions ahead of the group’s market cap, which now stands at about £500m.
He added the Myprotein brand would be a “hugely attractive” asset for major food conglomerates given global sales of £600m and “high levels of trust and authenticity.”
THG’s nod to a potential boost to annual profits, as milk and whey prices soften and the annualisation of its withdrawal from several lower-margin geographies, was also welcomed by analysts.
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