THG shares jumped on Wednesday thanks to an expected boost to profitability and the removal of its founder’s block on any potential sale.

Ahead of its AGM this week, the group said it expected a significant increase in first-half profitability after a “strong” second quarter.

Adjusted EBITDA is forecast in the range of £44m to £47m in the half, with guidance unchanged for the full year.

THG Nutrition had “a particularly strong” start to the year and the decision to keep prices competitive in the face of inflation was “now paying dividends”, it said. Commodity prices continue to ease, it added, with further margin benefits expected in the second half of 2023.

THG said the online retail platforms in its Beauty division had focused on profitable sales in markets where the group’s localised infrastructure could deliver economies of scale.

Meanwhile, the trading update also flagged that founder and CEO Matthew Moulding had cancelled the special share held by him, which means he will lose certain veto powers and will allow THG to qualify for a London Stock Exchange premium listing and join the FTSE 250 index.

Liberum said THG’s update represented “good progress on its focus on profitability and free cashflow generation”. It noted a strong start to the year in its nutrition business and “good progress” at Ingenuity, driven by new clients.

Jefferies added: “Cash generation has been ahead of expectations, and tangible progress on corporate governance continues to be made… We retain our positive stance on THG, continuing to believe that the major inputs that contributed to the downgrades through 2022 are now turning into tailwinds, and seeing considerable value and growth potential in the market-leading strategic assets owned by the group.”

THG shares jumped 6.8% to a post-bid speculation high of 77.8p on Wednesday, but quickly lost ground, wiping out most of Wednesday’s gains to fall back to 72.2p.

Elsewhere, Ocado shares surged 32.5% on Thursday morning to hit a four-month high of 570.4p on bid speculation.

A story in The Times linking Ocado with a possible bid from Amazon, which Ocado had yet to comment on at the time of going to press, saw the stock jump.

Orwa Mohamad, analyst at Third Bridge, said: “Amazon and Ocado are somewhat of a natural fit from a fulfilment point of view. One thing Amazon suffered from in the US with the Whole Foods acquisition is integrating the supply chain. With Ocado, they don’t have to do everything from scratch as it’s a modern and compatible supply chain and fulfilment process.”