The Hermes Retailer Leader of the Year
Matt Moulding
Founder and CEO,
THG
Pandemic year was the 'time to prove what you believe in'
Matt Moulding talks about THG's landmark year – from donating £100m of his shares to a charitable foundation to landing that Softbank joint venture deal
THG’s co-founder and chief executive Matt Moulding is struggling to find a meeting room in the group’s sprawling campus, a stone’s throw from Manchester Airport.
“I always get lost in here,” he says, pacing down cavernous hallways where curtained meeting rooms are interspersed between neon signs proclaiming to ‘Turn I Cans into Icons’, setups for beauty product shots, and a model wearing a fluffy robe and with hair in curlers being ushered into a photoshoot.
One can forgive Moulding for struggling to find his bearings. The content studio in which we manage to find a spare meeting room is one of a cluster of new hangar style buildings – alongside an automated fulfilment centre and head offices – which have been erected by THG on a site where there was “green grass nine months ago”, Moulding explains.
It is an apt metaphor for the rapid pace at which the Hermes Retail Leader of the Year is driving THG forward.
A year ago, Moulding led THG’s £5.4bn stock market debut – the biggest London IPO in five years and the first to be completed with no in-person investor meetings, owing to Covid-19 restrictions. Since then, the business has upgraded its forecast five times and in November 2020, its valuation ballooned over the £7.25bn threshold.
It has not all been plain sailing, however, as the slide in THG's share price in recent days shows – at the time of writing, the group's market cap is below its value at the time of the IPO.
Softbank investment
Since its float, THG has also struck a landmark joint venture deal with Softbank, the Japanese conglomerate that counts Facebook, Uber and Netflix among its previous investments. Softbank took a 19.9% stake in the group’s online tech and logistics division, THG Ingenuity, valuing that arm of the business alone at an eye-watering £4.5bn.
Not bad for a company that launched in 2004 as an online seller of CDs and DVDs.
“I just wanted to capture the internet: it was clear to me that it was going to change consumer behaviour and I wanted to be a part of that,” says Moulding.
The Hut Group’s co-founder and chief executive Matt Moulding is struggling to find a meeting room in the group’s sprawling campus, a stone’s throw from Manchester Airport.
“I always get lost in here,” he says, pacing down cavernous hallways where curtained meeting rooms are interspersed between neon signs proclaiming to ‘Turn I Cans into Icons’, setups for beauty product shots and a model wearing a fluffy robe and with hair in curlers being ushered into a photoshoot.
One can forgive Moulding for struggling to find his bearings. The content studio in which we manage to find a spare meeting room is one of a cluster of new hangar style buildings – alongside an automated fulfilment centre and head offices – which have been erected by THG on a site where there was “green grass nine months ago”, Moulding explains.
It is an apt metaphor for the rapid pace at which the Hermes Retail Leader of the Year is driving THG forward.
A year ago, Moulding led THG’s £5.4bn stock market debut – the biggest London IPO in five years and the first to be completed with no in-person investor meetings, owing to Covid-19 restrictions. Since then the business has upgraded its forecast five times, and in November 2020 its valuation ballooned over the £7.25bn threshold.
It has not all been plain sailing, however, as the slide in THG's share price in recent days shows – at the time of writing, the group's market cap is below its value at the time of the IPO.
Softbank investment
Since its float, THG has also struck a landmark joint venture deal with Softbank, the Japanese conglomerate that counts Facebook, Uber and Netflix among its previous investments. Softbank took a 19.9% stake in the group’s online tech and logistics division, THG Ingenuity, valuing that arm of the business alone at an eye-watering £4.5bn.
Not bad for a company that launched in 2004 as an online seller of CDs and DVDs.
“I just wanted to capture the internet: it was clear to me that it was going to change consumer behaviour and I wanted to be a part of that,” says Moulding.
"If you believe in the permanent shift in customers online, then prove it"
So pragmatic was THG about what it would sell online that it regularly switched the products it stocked over the years – “washing machines today, tomorrow confectionery” – in order to discover the category that would yield the greatest results.
The retailer landed on beauty in 2010, partly because of the similarities as a category with CDs and DVDs, with a high repeat purchase rate, small product sizes and low return rates, but without the looming risk of the digital revolution that was taking place in entertainment at the time.
The strategy to chop and change categories so nimbly was enabled by THG building its own technology, simply because, as Moulding says, “we couldn’t afford to use anyone else’s”.
Ingenuity in the making
What appeared to be an operational constraint at the time led to the creation of the group’s burgeoning Ingenuity division, which today counts 133 businesses ranging from Homebase to Coca-Cola among its clients. It launched 50 new websites in the six months to June 30, 2021, alone.
Ingenuity is currently the smallest of THG’s three primary divisions in terms of revenue but Moulding is confident that it will build momentum in years to come.
“If you speak to most retailers across the world, their primary challenge is getting a single item out of a warehouse and into the hands of a customer that wants it somewhere in the world,” he says. “That’s why having all the distribution capabilities and software that wraps around it in all the territories is really important.”
To this end, THG has committed to developing 3.6 million sq ft of warehouse and manufacturing operations across the world, in addition to its existing 2 million sq ft network.
Other leaders might have wanted to refrain from embarking on such an ambitious expansion plan while concurrently leading a business through its stock market debut and a global pandemic. But Moulding insists: “It’s the very time you should be doing it – if you believe in the permanent shift in customers online, then prove it. The proof is in your investment and the other things we’ve done.”
"We are committed to building an absolute goliath in beauty. That plan is all about investment... you come to IPO for a reason... for me the real benefit was the ability to access capital and deploy it"
Moulding says THG will go where opportunity blows in the coming years, but there is one sector he is absolutely gunning for. “We are open to change but what we are committed to is building an absolute goliath in beauty,” he says. “That plan is all about investment so we can really accelerate its position across the industry.”
THG is plotting a separate listing for its beauty division to expedite that growth.
Moulding says the ability to rapidly raise investment and move at speed is what motivated THG’s initial London listing last year.
“You come to IPO for a reason – if you don’t have [that reason] it’s not a good idea. For me the real benefit was the ability to access capital and deploy it.
“It is easier to be a private company but it takes much longer to build capital; you can raise a billion pounds in a few days when you’re listed while raising a few hundred million takes months when you’re private.
“In order to build at the level we have, in terms of job creation and investing in different territories all over the world, an IPO was the only way to do that.”
A sound structure
Going public has meant operating under a greater level of scrutiny, however; one that has raised eyebrows in some City circles about Moulding’s joint position as THG’s executive chair and chief executive, as well as owner of a golden share.
But Moulding is defiant and unapologetic: “Whenever we do anything we set ourselves up for the best chance of success – we don’t follow everybody else. If I did that then the best we’d ever come is second,” he asserts.
Moulding points to the fact that, although THG’s corporate structure is unusual for a listed retailer, it is “incredibly common” in financial and media corporations. He also nods to THG’s history of bringing in external chairs prior to its float, including former Co-op chief executive Richard Pennycook.
“I’ve probably had 10 years of bringing chairs on board to help me and advise me – some partnerships have been great, some less so,” he says. “Having seen all that and making a move on to a very sensitive market, when no one had done an IPO for years, during a pandemic, while all these international companies are coming in and buying up UK assets and moving them overseas, I knew I wanted to protect what we had and give it the best opportunity to grow. So far it’s worked and we’ll always evaluate it.”
Grow is exactly what THG has done – and at a staggering rate. The group recorded revenue growth of 45% to £958.8m in the six months to June 30, almost double the level reached in 2019.
"For digitally focused businesses in the main it has been much easier to lead than for many others... we have had tailwinds so doing the right thing should be a given"
Such momentum is all the more impressive against the backdrop of the pandemic, which brought on such “unprecedented disruption” for the movement of goods that in April 2020, THG bought two cargo planes in a partnership with Singapore Air to transport its own products directly.
But Moulding shrugs off the challenges associated with running THG during the crisis: “If you are a digital business that cries ‘woe is me’ during the pandemic, I struggle with that. I believe for digitally focused businesses in the main it has been much easier to lead than for many others. Imagine trying to run the NHS, or a high street retailer, or even a grocer. We have had tailwinds so doing the right thing should be a given, because you are in clover.”
For Moulding, “the right thing” meant turning over THG’s chain of hotels to NHS staff, providing them with free products across its beauty and nutrition brands, and switching manufacturing in its warehouses to make anti-bacterial hand gel at the height of the health emergency last spring. The group also offered staff access to an in-house GP and stopped international travel in January 2020 as murmurings of the health crisis emerged in other corners of the globe.
Amazon-paced ambitions
In the midst of such upheaval, one thing has remained constant: Moulding’s restlessness around realising THG’s full potential.
“Imagine running Amazon at the top level – now that is how you do fast pace. We are going within our bandwidth but there are others going at a colossal rate, so when you drive home at the end of the day it is clear there is plenty to go at to get ourselves to the next level.”
It is this same never-satisfied mindset that means the 49-year-old struggles to pinpoint a particular highlight of his career so far, though he concedes, when pushed, that “Softbank was a good day”.
“The stuff I take a positive from is having created from nothing, a piece of paper, 14,000 jobs by the end of this year,” he says.
“We’ve created billions of pounds in value for those who put their faith in us, both before and after the IPO. And so far we’ve given away a billion pounds to staff.
“That’s not bad is it, for people who are giving their working life to us?”
"With wealth, if you’re spending it and you’re not sharing it at the same time, it can become quite dangerous – you take something away from your children by giving them everything"
Many entrepreneurs who, having achieved what Moulding has over the past year in particular, would be content with cashing out, handing over the reins and putting their feet up. But that is not what drives Moulding, a man who names Mallorca as his favourite family holiday destination largely because he is able to work from there easily.
That ferocious work ethic aside, Moulding, a father to one daughter and three sons between the ages of 11 and 21, is clearly a proud family man. He watches “any boxset that’s out there” in his downtime and jokes about weekends that are “chewed up once football season starts” between supporting Manchester United and ferrying his kids to and from their own matches.
Does he see a time when he could take a step back from the breakneck pace of life in the THG hot seat?
“I don’t think like that – my lifestyle hasn’t changed, I haven’t sold a single share. I’m not in it with that in mind,” he insists. “It’s a bit like Forrest Gump; maybe one day I’ll wake up and think ‘I’m stopping now’ and that will be it – but it’s not at all something I think about.”
Family values
When it comes to leaving a lasting legacy, however, Moulding has much more concrete plans. Earlier this year he donated £100m of his THG shares to a charitable foundation established by his family. A move, he says, was made on “the first day I was allowed to” under market rules following the company’s listing.
Moulding explains: “With wealth, if you’re spending it and you’re not sharing it at the same time, it can become quite dangerous – you take something away from your children by giving them everything”.
To that end, Moulding recently appointed his eldest son, who is 16, as a trustee of the Moulding Foundation.
“Letting them get involved and seeing what you can do with [wealth] and playing a role in that can give them that balance they need,” he says. “I am unashamed: I want to be able to give my family the best life I can in moderation but you owe it to them to give them balance at the same time, so they can be fully rounded. It is a positive to see that real problems exist and that they can do something about it.”
This same grounded outlook applies when Moulding, who grew up in Colne near Burnley, reflects on his own work.
“It’s not working like a lot of people work – I am not out there emptying bins, sweeping streets, cleaning windows, [doing] tough, physical work... this is different.
“I don’t do a lot outside of work because I’m happy. I come into the office of a morning and I can choose what I do with my time, to a point, which not many people get to do.”
Moulding’s contentment and ambition will be music to the ears of THG investors but will sound a lot more like an alarm bell to its competitors.
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