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Beauty and nutrition retailer THG (LSE: THG) saw its share price climb 24% in October, following a return to the FTSE 250 in September.
A falling stock valuation led to demotion in June, but it’s been clawing its way back. From a 12-month low, the THG share price has more than doubled. Is the tentative recovery going to stick?
The back story
At IPO in 2020, the company looked like it could be the next shiny growth-by-acquisition online retailer. It’s already easy to forget how much the pandemic had hurled digital commerce into the spotlight. There were even those who thought it might be just the thing needed to clear out the old ways of doing retail business, and that bricks-and-mortar stores would soon be history.
But what a change just a few short years — and a bit of biotech brilliance in vaccine development — can make.
The THG share price really went off a cliff in 2021, with the company facing increasing investor scrutiny. There were questions over governance. Some raised doubts over the value of its technology and logistics arm, Ingenuity. And it came under a short-selling attack.
The stock crashed. And today, even after the gains since the summer, we’re still looking at a 92% loss since flotation.
The turnaround
In the past few years, THG has divested or discontinued a number of its acquisitions and brands. And as recently as January 2025, the company demerged its THG Ingenuity division into a privately-owned, standalone business.
We’re left with two consumer businesses, THG Beauty and THG Nutrition. Is the slimmed-down new-look THG worthy of investor consideration?
In a trading update on 14 October, Q3 was billed as the “strongest quarter of organic sales growth since 2021“. It returned the company to year-to-date revenue growth, which looks like something of a milestone.
Revenue grew 6.3% in the quarter, from continuing operations and at constant currency. Both businesses contributed to the upturn.
The way forward
With a quarter to go, the company reiterated its earlier year-end guidance. It expects revenue in the second half to grow between 1% and 3% at THG Beauty, and by 10% to 12% at THG Nutrition.
It really does look like the current management might have pulled it off. Rating the valuation of the THG share price, however, is not a simple task.
After years of losses, there’s still no profit on the table. But forecasts have the annual loss per share falling dramatically by 2027. In fact, if the trend is solid, I see a good chance of profit by 2028.
We’ve seen brokers warming a little too — at least taking THG out of Sell territory. And right now I see two out of six even rating the stock a Buy.
What to do?
There’s still plenty of risk with three more years of losses on the cards. Rising revenue should lower the chance of needing a new cash injection, but that fear remains. And it’s a competitive business.
But I do like the look of the refocus I’m seeing. Growth stock investors could do well to consider buying now.
