Shares of The Hut Group (LON: THG) rose to new all-time highs after paying more than £300 million to purchase three companies as a part of the company’s aggressive growth strategy.
Fundamental analysis: Aggressive strategy executed
The group said it plans to acquire the skincare company Dermstore from the U.S. retailer Target for $350 million (£259 million). The e-commerce company also bought two of its nutrition product suppliers Claremont Ingredients and David Berryman Limited for a total of £59.5 million.
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The group’s moves point to its quick expansion plans after its remarkable market debut in September. The Hut Group secured £1.88 billion in its initial public offering, the largest one in Britain since 2015. Shares of the company climbed over 5% in the morning, taking its market cap to more than £7 billion.
The company said the buyout of Dermstore would contribute sales of around £135 million this fiscal year. The Hut Group expects to obtain regulatory approval for the deal next month. Furthermore, the acquisitions of Claremont and David Berryman Limited are set to contribute sales of around £15 million.
“A key driver behind the decision to list The Hut Group on the London Stock Exchange just over three months ago was to enable the group to make major global investments, such as Dermstore.com,” said chairman and CEO of the Hut Group, Matthew Moulding.
“Accessing capital through a London listing has enabled us to accelerate our growth plans and build out a global leadership position within the exciting beauty industry.”
The group increased its full-year revenue guidance two months ago on expectations of robust sales on Black Friday and during the Christmas holidays. Its estimate for the full-year revenue range between £1.48 billion and £1.52 billion.
Technical analysis: Shares soar
The Hut Group stock price is trading nearly 12% higher this week after gaining on the acquisition news. This way, the price action exceeded the 800p mark for the first time after hitting 808p.
THG stock daily chart (TradingView)
On September 14, THG made its market debut at 600p, meaning that shares have gained almost 35% in over three months’ time. The next target for the buyers is 845p.
The Hut Group purchased three companies including skincare brand Dermstore, Claremont Ingredients and David Berryman Limited for more than £300 million as a part of its rapid expansion strategy.