THG says Dermologica is not restricting stock over discounting concerns
Matthew Moulding’s online beauty, wellness and software giant THG has denied suppliers are restricting stock over concerns about ‘aggressive discounting’.
The Manchester-headquartered group has issued a statement to the London Stock Exchange after reports that Dermologica, which is owned by Unilever, is one of a number of brands that have reduced supplies to protect their pricing.
The response from THG comes after the firm’s share price tumbled to its lowest level ever yesterday following reports it was locked in a dispute with Unilever subsidiary Dermalogica on the grounds it was discounting products too heavily in order to hit sales targets.
THG said today that reports of the dispute were “media speculation” and there was “no notifiable reason” for the firm’s plummeting share price yesterday.
“Dermalogica has not placed and is not looking to place any restrictions on its trading relationship with THG Beauty, including with regard to the supply of stock,” THG said.
“The Dermalogica and THG Beauty trading relationship is over 10 years in length and whilst it remains very positive the overall revenues generated are de minimis to the Group, at c.0.1% of FY 2021 sales.”
Bosses at THG said they are “not aware” of any key suppliers to THG’s beauty division that have or intend to restrict supply to its beauty division.
The rebuttal comes amid reports of growing unease from suppliers over the firm’s pricing strategy. An industry source at one supplier told The Telegraph: “They (Dermalogica) are not the only ones. Working with THG is not easy because of the high profit margins they need, but when they tear down your brand too it’s not worth it.”
Boss Matt Moulding has overseen a disastrous slide in the firm’s share price since it floated last year, with THG currently trading at 85 per cent discount to its floatation price.
Private equity firms are said to now be circling the business and readying a bid, while bankers are Barclays and Jefferies are advising THG to fend off a hostile takeover approach.
Moulding’s rebuttal of the rumours settled some investor concerns, with the firm’s share price jumping around 5 per cent in early trading.
