The Hut Group, who trade online as The Hut at http://www.thehut.com/, has been one of the fastest growing online retailers in recent times, establishing itself as a market leader in a competitive marketplace that has traditionally been dominated by eBay and Amazon.
The performance of The Hut Group, which has had investment from and returned cash to private equity as well as individual investors such as successful retailers Sir Terry Leahy and Sir Stuart Rose, had aroused talk that the company would explore options for an IPO at some point this year. Indeed, a strong performance in 2013 led to this Financial Times report in September of last year that stated The Hut Group was preparing to go public in the first part of this year.
The Hut Says No to IPO
The FT has now followed up on this report by carrying quotes from Hut Group Chief Executive Matthew Moulding, where he rules out the possibility of the company going public at all this year, citing volatile share prices and uncertainty around how sustainable the high priced valuations of technology that are currently prevailing in the marketplace are. The report can be read in full here.
Mr Moulding told the FT, “It would have been all too easy to rush to market with the incredibly frothy valuations. “It has been down to how hard do you want to push on your own valuation, at IPO. That sets the mark. Hence you have seen [some very high] valuations. Everyone needs to see how that settles down first. We don’t have any need to get caught in that crossfire.
“A lot of investors will look to have lost a lot of money and so there will be a reflection point where they try to understand better the business models. And also, we need to see some results from those businesses that come to market.”
Recent Floats’ Performance
While late 2013 and early 2014 was expected to be a hot period for IPO’s, the reality has seen investors fast get fatigued with the volume of IPO’s. Fashion retailer Fat Face recently abandoned plans for an IPO, while AO World and Just Eat are among the large brands to float recently and see their share prices below their initial debut price.
The continuing uncertainty around technology comes after a month where it was hoped the sector might be looking at a sustained rebound, with this DealMarket Blog report looking at another FT piece that suggested as much.
Future Prospects for The Hut
This saga of sorts represents the second time in recent years that The Hut have considered an IPO only to ultimately decide against such a course. Mr Moulding admitted to the FT that the company is still ultimately looking to go public, and is likely to do so within two years. He is confident that they’ll do so in a position to capitalise on the market, adding, “It doesn’t bother me if the stock market – the tech stocks – crashes 90 per cent in the next two years . . . It only really matters if you need to raise funds.”