THG Plc warned that profitability missed analysts’ estimates and forecast sales growth will decelerate this year amid record commodity prices and continued uncertainty from the pandemic.

Shares of the beleaguered shopping emporium dropped as much as 5.6 percent in early trading Tuesday after losing three-quarters of their value in the past year.

THG, co-founded by Matthew Moulding, has been dogged with controversy amid concerns about corporate governance and growth prospects of its Ingenuity unit, which helps brands sell their goods online, offering services from building websites to fraud detection. The company blames short sellers for the drop in confidence about its business.

Formerly known as The Hut Group, the company sells beauty, skin care and health food products across hundreds of websites.

THG said its adjusted earnings margin was in the range of 7.4 percent to 7.7 percent in 2021, lower that the market’s estimate of 7.9 percent. Adverse currency shifts stripped 0.9 percentage points off the margin, THG said.

The company also forecast sales growth of 22 percent to 25 percent in 2022, compared to a near 38 percent uplift last year.

While the early part of 2022 is expected to be more challenging, THG said it expects its profit margins to improve throughout the year as investments in automation start to pay off.

Ingenuity now has 187 live customer websites, up from 163 in the third quarter. The company has set a target of 400 live websites by the end of 2022. The company reiterated that Ingenuity will generate revenue of as much as £112 million this year.

The company’s share price has been weighed down by fears about Ingenuity and corporate governance concerns, largely around Moulding’s tight grip on THG as a major shareholder, landlord, chairman and chief executive officer. Investors also question about whether SoftBank Group Corp., a major investor, will exercise an option to buy 20 percent stake in Ingenuity.

Following a tumultuous year as a public company, Moulding hinted at an event in November that he might consider taking the business private again.

By Deirdre Hipwell

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