City comment: WPP imitation shows THG deserves some credit for its Ingenuity

The lipstick-to-protein shake seller, formerly known as The Hut Group, has seen its share price sink over 80% since last summer on a myriad of investor concerns. Chief among them: THG’s plan to spin out its beauty and health businesses and focus on its platform division, Ingenuity, instead.

Ingenuity builds and runs shops for other brands. When THG boss Matt Moulding announced plans to go all-in on Ingenuity, it was scarcely a glint in the CEO’s eye. Investors worried the early-stage business was too much of an unknown to bet a billion pound company’s future on. Moulding argued Ingenuity deserved THG’s full attention as its opportunities for growth were far bigger than for other divisions.

Results last week show he might be right. Ingenuity is advancing rapidly. 200 live websites were using Ingenuity’s tech by the end of March and THG hopes to double that number by the end of this year. Sales over Ingenuity-run websites grew by nearly 50% in the first quarter, more than double the growth seen in THG’s next best performing division. The numbers are small but the momentum is notable.

Now WPP, the advertising and marketing giant, is now getting in on the act. The company has announced a new division, Everymile, that will set up online shops and handle orders for brands. It is hoping to pitch big clients like Coca-Cola on the idea.

This is stiff competition but validates Moulding’s idea. Imitation is the sincerest form of flattery, after all.

WPP CEO Mark Read admitted in an interview with the Sunday Times over the weekend that Everymile is “not dissimilar to what THG does.”

Ingenuity still has a long way to go to prove its potential and Moulding’s communication with the market to date has left a lot to be desired. But THG is showing progress on both fronts. Perhaps it’s time for a rethink.