In a dramatic turn of events on the London Stock Exchange, shares of e-commerce giant The Hut Group (THG) went into a tailspin, nosediving by a staggering 30% on Wednesday. The catastrophic drop was triggered by a disappointing trading update that revealed weaker-than-expected third-quarter sales, forcing the company to issue a stark profit warning.
The Manchester-based group, which owns popular health and wellness brands like MyProtein, pointed to a significant slowdown in sales momentum across its European markets as the primary cause for the bleak forecast. This performance has sent shockwaves through the City, erasing hundreds of millions of pounds from the company's market valuation in a single day.
Profit Forecast Slashed Amid Sales Slump
THG was forced to make a brutal revision to its full-year earnings outlook. The company now anticipates its adjusted earnings (EBITDA) to be significantly lower than previous guidance, landing in the range of £100m to £130m. This marks a sharp decline from earlier, more optimistic projections and reflects the challenging trading conditions it suddenly faces.
The group's statement to investors highlighted a specific "weakening of consumer confidence" that accelerated throughout the summer months, particularly impacting its key European territories. This sudden shift appears to have caught the market by surprise, leading to the massive sell-off of THG stock.
MyProtein Loses Its Momentum
At the heart of THG's business is its nutrition division, THG Nutrition, which is dominated by the flagship MyProtein brand. This segment has historically been the company's growth engine but is now showing clear signs of strain. The reported sales slowdown in Europe suggests the brand's previously unshakable momentum is facing serious headwinds.
Despite the gloomy European picture, THG's report did contain a small silver lining. The company noted that trading in the UK and the US "remained in line with expectations," indicating that the problems may be more geographically concentrated rather than a global brand issue.
This severe market reaction underscores the immense pressure on THG to prove its business model can withstand a cost-of-living crisis and shifting consumer spending habits. Investors will be watching closely to see if the company can regain its footing in the crucial final quarter of the year.
