Matt Moulding is delighted that The Hut Group has kept under the radar.
Interview by Peter Evans The Times
The Hut Group’s headquarters next to Manchester airport could easily be mistaken for a cocktail bar in nearby Wilmslow, the mansion-heavy Cheshire town favoured by Premier League footballers. The decor is cream, the staff are almost all under 30 and there is a DJ playing a minimalist cover version of Paul Simon’s You Can Call Me Al. It wouldn’t be a surprise if Coleen Rooney walked in.
Yet it is 11am and this is a place of work. The Hut Group (THG) has stealthily become a global retail success story, selling more than £900m of health and beauty products last year through its 166 websites. The company is said to be valued at about £4bn — similar to Marks & Spencer — but is far from a household name. How is it possible to have flown under the radar for so long?
“I quite like people not knowing what we do,” says Matt Moulding, the taciturn co-founder and chief executive, sitting in THG’s boardroom last week. He speaks quietly with a Lancashire accent.
“The number of people who say it’s just a collection of hotchpotch stuff . . . they really don’t know what we’re doing and I’m all right with that.”
It is going to be difficult to keep the secret for much longer. THG owns brands such as Myprotein, Espa and Mankind and has developed technology that allows its customers to shop on their phones and receive orders the next day. Growth has been rapid — it sells in 164 countries, and the 5,500 staff will soon move into a purpose-built campus next door that will have room for 10,000 people. It is part of an £800m development project over two sites; THG also has a 1m sq ft warehouse in nearby Warrington.
An even greater threat to the company’s low profile comes from the decline of the high street. As shops shut and jobs are lost, big online retailers are coming under fire. That puts Moulding, 47, front and centre — which is not somewhere he wants to be.
“I’d just rather deliver the numbers,” he shrugs. “I enjoy what we’re doing, I don’t need other people to see it.”
At first, Moulding does nothing to dispel the impression of THG’s office as a high-end Cheshire nightspot. He wears a tight-fitting T-shirt and skinny jeans, and tells me he has been to the gym for nearly 300 days in succession. It is hard to decide which is more sculpted — his biceps or his eyebrows.
However, the manicured look is at odds with Moulding’s unfussy personality. His business is the same. THG may appear to be an online retailer, but it is really a technology business, the chief executive insists.
The trick has been to build its infrastructure from the ground up. Other companies have a “colossal mixed bag of everyone else’s tech”, Moulding says, but THG has developed its own warehouse management systems, web services and logistics software. Owning the technology allows him to stay in control of everything else: production, marketing and distribution. Last year, THG earned about £40m from licensing its technology to other businesses. Ocado, the online grocer, does something similar.
Control is vital for Moulding. Most of the THG empire is marshalled from his phone, where he has a dashboard that keeps him up to date with the business in real time. “With this I can develop a strategy on an immense scale,” he says, sounding like a Bond villain as he holds up his iPhone. “I’ve got a knowledge base that is unparalleled.” If it sounds obsessive, that’s because it is.
On the rare occasions THG makes the news, it is usually for completing an acquisition. It recently bought the French haircare brand Christophe Robin for about £50m. Moulding claims the deals are just a way of making better use of the technology. “It’s irrelevant [when we buy something]. What we’re then doing is putting it onto our escalator that zips it wherever it needs to be in the world.”
He started THG 15 years ago after working for Caudwell Group, the mobile phone and technology conglomerate founded by the Phones4U entrepreneur John Caudwell. Moulding repeatedly suggested that the company should move into online retailing, but was rebuffed.
Did he fall out with the boss? “There’s elements of the Caudwell Group I probably haven’t brought with me,” Moulding says. There was certainly an upside to his decade there, which saw him rise to finance director of the distribution division: he made “a couple of million” when Caudwell sold up, using the cash to start THG with John Gallemore.
In 2009, THG bought Zavvi — formerly Virgin Megastores — out of administration, but Moulding decided there was no future in selling music and entertainment online with Amazon “becoming a beast”. So he set his sights on health and beauty, partly because owning the brands made the margins “phenomenal”.
THG’s success has attracted big-name investors. The private equity giant KKR owns 15%, while the tech specialist Balderton Capital holds 14%. Moulding and THG’s management still own more than a quarter of the company.
“Matt is one of the most phenomenal tech chief executives in Europe,” says Bernard Liautaud, Balderton’s managing partner and a board director at THG. “He combines an extremely ambitious vision with a relentless drive for execution.”
It has been some journey to get to this point. Moulding grew up in Colne, a market town north of Burnley. His father was a road worker, laying tarmac, and his mother was a homemaker, or “whatever the PC term for it is at the moment”. He went to a state school, where he was in the year above Matt Riley, who went on to found the telecoms giant Daisy. Two tech multimillionaires in successive years. How many private schools can say that?
At the time, though, Colne did not feel like a breeding ground for entrepreneurs. “It’s just like everyone else’s story, typical working class. You go to university, you get away and you’re not going back.”
Except it is not like everyone else’s story. The Sunday Times Rich List puts the Moulding family fortune at £600m, level with the property magnate Gerald Ronson and his family.
As if to show how far he has come, during our conversation a call flashes up from Sir Terry Leahy, one of THG’s early investors. “That’s bizarre, he never calls me,” Moulding says as he ignores his phone. He posits a theory as to why the former Tesco boss is trying to reach him, but makes me promise not to reveal it.
The call almost feels staged, but Moulding is no name-dropper and abhors schmoozing. Unlike most bosses of global firms, he almost never travels. He has been to London once this year (twice last year) and insists that investors come to Manchester — where he started his career as an accountant with Arthur Andersen — if they want to see him.
However, there are signs that Moulding is ready to take on a more public role. He has been outspoken on the potential imposition of an online sales tax, a prospect that gets him uncharacteristically worked up. “I’m going to raise the flag if I think something is pretty stupid, and that’s as stupid as it gets,” he says.
Why, he asks, should online retailers be penalised for traditional stores’ failure to invest? He blames the parlous state of the high street on the fixation of some of these retailers on paying huge dividends instead of investing in their future. Online platforms, from Amazon down, have no such compulsion: “No one pays dividends because it’s reinvest, reinvest, reinvest.”
Moulding is not afraid to spend big. He says the cash generated by THG and bank borrowing gives him a potential war chest of £1bn to spend over the next three years. The money will go on acquisitions, warehouse space and investing in new technology. He will soon launch THG Air, a fleet of planes to speed up deliveries.
Brexit planning has eaten up some cash. THG spent £100m on a Polish warehouse soon after the vote to leave the EU and is hoarding £90m of additional stock. Being able to make quick investment decisions is one of the reasons why Moulding says he has no plans to float the business.
There is another, more personal reason for refusing to go public: “If I do that, I lose control.”