THG Shares Plunge as Weak Q3 Forecast Overshadows H1 Beat

Shares in THG Holdings PLC (LSE:THG) plummeted on Tuesday after the e-commerce group warned of a sharp slowdown in near-term growth, spooking investors despite reporting first-half results that beat its own guidance. The stock fell as much as 13.4% to 27.44 pence, hitting a new 52-week low intraday as the market focused on future headwinds rather than past performance.

Guidance Sours Strong H1 Results

THG announced that for the first half of 2026, revenue grew 7.2% in constant currency to £828.7 million, while adjusted EBITDA more than doubled to £42.8 million. While both figures surpassed the company's prior expectations, the positive results were completely overshadowed by a significant downgrade to its third-quarter outlook.

Management now projects that Q3 revenue growth will slow to approximately 2%. This stark deceleration from the first half's performance rattled investor confidence and triggered a significant sell-off, signaling concerns that the company's growth trajectory is under pressure.

Regulatory and Consumer Headwinds

The primary driver behind the weak forecast is a recent regulatory change in the European Union. According to the company, the EU's abolition of its €150 de minimis customs duty exemption, which was replaced by a flat €3 charge per parcel starting July 1, is expected to negatively impact sales, particularly within the THG Beauty division.

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Compounding this issue, THG cited other factors that dampened performance:

• A European summer heatwave that suppressed consumer demand.
• The timing of certain own-brand beauty revenues being shifted into the fourth quarter and 2027.

Broader Investor Concerns

Beyond the immediate growth slowdown, investors are also monitoring several other risk factors. The company noted that a £60 million VAT claim with the UK's HMRC remains pending, with no substantive update expected until the end of October. This adds a layer of uncertainty on top of the group's existing net debt position of £329.7 million.

Although management reiterated that its full-year expectations remain in line with market consensus and pointed to a potential growth recovery to 6–7% in Q4, the market verdict was clear. The combination of a severe near-term guidance cut and persistent balance sheet concerns prompted investors to price in higher execution risk, overlooking the otherwise solid H1 profitability improvements.