THG (LSE: THG) has been an incredibly poor performer since it went public in early 2021. Over this period, the UK stock has shed around 93% of its market value.

Yesterday (17 September), the e-commerce firm formerly known as The Hut Group reported its interim results. The market reaction wasn’t positive and the share price has since fallen 15%.

Will I buy the dip? Let’s find out.

Uninspiring results

THG consists of three divisions:

• THG Nutrition focuses on supplement products and owns the MyProtein brand
• THG Beauty owns several beauty brands, including LookFantastic
• THG Ingenuity is an end e-commerce platform offering technology solutions for retailers

In H1, revenue at Beauty (its largest division) rose 6.9% year on year to £531m. Ingenuity revenue jumped 14.1% to £80.2m, but was more than offset by a 7.5% fall in sales (£299m) at its Nutrition business.

Overall, this meant group revenue increased 2.2% to £911m, when stripping out £23m of discontinued revenue. Adjusted EBITDA improved by 3.6% to £48.8m, translating into a 5.2% margin (an improvement from 4.9%).

Management did say its nutrition business had picked up in the (current) third quarter, and it sees a return to growth there. Beauty sales are also growing, albeit more slowly than at rivals like Warpaint London.

Looking ahead to the full year, THG anticipates that EBITDA will be towards the “lower end” of the current consensus range (£134m-£156m). It blamed foreign exchange pressures for this.

Given the tough consumer environment, I’d call this trading resilient rather than exciting. The firm still posted an £84.4m operating loss for the period.

Three becomes two?

The big news is that THG plans to demerge its Ingenuity technology platform. This interesting but loss-making division has been dragging on group profitability, so this could unlock value for shareholders (if approved).

The firm says the positive cash flows from the remaining nutrition and beauty segments could support future dividends.

However, I note that Ingenuity generated £226m of its £306m in revenue from THG itself during H1. Only £80m came from elsewhere, so there would be plenty to untangle and clarify.

Plus, net debt stood at £685m in June. How would that be split? There’s still a lot of uncertainty here.

Should I buy THG shares?

It’s difficult to know whether the stock is in the bargain basement or not. On a price-to-sales (P/S) basis, it looks very cheap, trading on a multiple of just 0.38.

However, I find it difficult to predict whether sales in this business will be higher or lower five years from now. Growth has been very patchy and it’s still losing money, which adds risk to the investment case.

Stepping back, I also worry that its collection of brands lack durable advantages that protect them from competition. Some sort of ‘moat’ is the first thing I look for in an investment and I can’t see one here.

Personally, I get my supplements from Amazon as part of my Prime membership. When I compare MyProtein‘s subscription perks, I don’t see a compelling reason to switch. Doorstep delivery? Free shipping? Flexible subscription? Amazon offers all that, while I also watched AC Milan vs Liverpool last night with Prime!

All things considered, I see better stocks out there for my portfolio.