The embattled boss of one of Britain’s biggest technology firms has drawn up an audacious plan to grow capacity so it can handle a mammoth £14billion of orders a year, The Mail on Sunday can reveal.
Matt Moulding, founder and chief executive of THG, formerly known as The Hut Group, has told City investors he is pumping another £200million this year into the strategy, which includes a huge new warehouse in Manchester to handle an expected boom in e-commerce orders.
The automated warehouse, which is already partially operational, can process up to 500,000 items a day. It houses an army of 256 robots scuttling around the clock to pick and pack orders for the group’s online beauty websites, including Lookfantastic and Cult Beauty.
Rich pickings: The automated distribution centre in Manchester that Matt Moulding, left, with wife Jodie, expects to see an orders surge
THG wants to open similar warehouses in New Jersey and Dubai as part of Moulding’s global strategy. It already has sites in Melbourne and Poland.
Moulding and his new chairman, former ITV boss Lord Allen – once known as one of the City’s most prolific dealmakers – unveiled the plan to analysts and investors in recent weeks. It follows a torrid time for THG, which has seen its share price plunge by nearly 80 per cent since its £5.4billion stock market flotation in 2020.
Moulding, who netted £830million following the listing, has been criticised for the group’s poor corporate governance, including a controversial ‘golden share’ that protects THG from takeover.
Last month, THG revealed it had rejected ‘numerous’ takeover approaches – but declined to say from whom.
As recently as November, Moulding, who has a 22 per cent stake in THG, appeared to suggest he might take the business private, saying he had ‘options’ as a big shareholder who owns more than half the business when combined with ‘a few people that I’m close with’.
He also said he wished he had not listed the firm in London, and that the experience ‘just sucked from start to finish’.
The Manchester warehouse forms part of a vast hub of box-shaped sheds, offices and studios close to the city’s airport. The site covers a million square feet, and is the epicentre of Moulding’s sprawling business empire.
Last week, THG workers queued patiently outside the complex for company buses to take them home. By contrast, a few miles down the road, but half a world away, is the Hale Country Club and Spa.
Nestled in leafy Cheshire countryside, the members-only club offers ‘an exclusive world of wellness’ for those ‘looking for sanctuary from everyday life’ – if you can afford the premium subscription of £2,760 a year plus £350 joining fee.
One-hour spa treatments, including a ‘mellow mamma maternity massage’ and a men’s ‘personalised facial’ are an extra £105 – or £140 for non-members.
The club, along with several Moulding-owned luxury venues in central Manchester, including King Street Townhouse and Great John Street Hotel, are also used to promote THG brands such as ESPA and MyProtein. But the distribution centre, the club and hotels have one thing in common. Moulding Capital Ltd, which is owned by the THG founder, is landlord to all of them.
Under the terms of a controversial sale and leaseback deal in the run-up to THG’s flotation, Moulding Capital receives £20million a year in rent on these and a total of 30 commercial properties.
Analysts are sceptical about Moulding’s plan to increase order capacity to £14billion a year. It was not included in the announcement of THG’s recent results. The report released to the stock market said the business would grow at about 22 to 25 per cent this year, on current sales of just over £2billion.
In a recent conference call, Simon Bowler, an analyst at investment bank Numis, asked: ‘Is it the case that you are literally sitting there bearing the cost of £12billion of empty, unutilised warehouse space or are there further investments that are needed to be made to unlock that £14billion number?’
When pressed on the number, chief financial officer John Gallemore dismissed doubts and said the capacity target included a strategy to handle billions of pounds of orders for other retailers and brands long-term. He said there was a misunderstanding about ‘the scale of the pipeline of clients’.
One senior City source said the figure seemed like ‘smoke and mirrors’, adding: ‘That number is not relatable to anything it can realistically achieve. Every day would have to be Black Friday.
‘It’s a very confusing and PR-led piece of disclosure.’
THG has run into trouble before over its communications with the City. Its shares fell sharply last year after a capital markets day presentation failed to reassure investors about prospects for Ingenuity, a small but growing division that builds and runs websites for other retailers.
It currently operates 200 live websites and hopes to double that number by the end of the year.
However, competition is increasing. Marketing services giant WPP last week announced plans to set up a new online division called Everymile that will handle orders for brands direct from customers’ screens to delivery on their doorstep – a direct challenge to THG.
THG declined to comment.