The Hut Group starts 2021 with a buying spree

Darren Sinden

The Hut Group upgraded its forecasts for Q4 revenue growth substantially at that time to between 40% and 45% year-over-year

The most successful UK IPO of 2020 is hitting the ground running in 2021. The Hut Group which runs a number of high-end e-commerce sites and brands listed on the London Stock Exchange in September 2020 in the largest UK IPO for seven years.

Since debut, the stock has risen in value and finished 2020 with a market cap around £6.80 billion making it theoretically large enough to qualify for inclusion in the FTSE 100 index, the benchmark that tracks the performance of the UK’s leading shares.

The Hut Group is using its new status to expand overseas through the acquisition of Dermstore.Com for $350.0 million (or £259.0 million) from giant US retail chain Target. Dermstore specialises in online skincare and should sit in the “brands vertical” within The Hut Group structure, which already contains businesses in the beauty and nutrition spaces.

Indeed The Hut Group is also adding to its stable of nutritional brands with the purchase of two UK based suppliers David Berryman and Claremont Ingredients for which it’s paying a combined £60.0 million.

Hut Group founder Matthew Moulding is well versed in the world of online technology and retail having previously been at the now-defunct Phones4U. The mobile phone empire founded by Billionaire John Cauldwell. Hut Group’s CFO John Gallenmore is also another former Phones4U executive.

The Hut Group’s IPO was a feather in the cap for the London equity markets in a difficult year, although the company doesn’t meet the governance standards necessary for inclusion in the top flight of UK listed equities, as Matthew Moulding holds the roles of both Chairman and Chief Executive at the company. Something that is increasingly frowned upon by ESG savvy investors who demand transparency and independence in the boardroom.

The Hut Group will publish its Q4 trading update on January 12th though it did provide some guidance in early December when it announced that it had been trading ahead of expectations during October and November.

The Hut Group upgraded its forecasts for Q4 revenue growth substantially at that time to between 40% and 45% year-over-year. It also raised its expectations for full-year 2020 revenues which it expects to grow between 38 and 40% to £1.57 and £1.60 billion.

The stock has risen by another 3.64% today moving above the £8.00 per share mark and to a £3.00 premium over the IPO price of £5.00.

The Hut Group is not only a poster boy for the London Stock Exchange and its desire to win a larger share of the technology IPO market but as an online business that trades in 169 countries and in 39 currencies, it’s exactly the sort of business that the UK’s post-Brexit economy will be looking to for growth and innovation.

Hut Group has ambitious plans to develop sites at Manchester airport as its new business campus and content creation studios spread over 11.60 acres. Which it believes could help create up to 10,000 jobs in the area. So there is a lot riding on the continued success of the business and as such, it is a story that we will be watching with great interest going forward.

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