THG distribution centre in Omega, Warrington. Credit: 50Stripes/commons.wikipedia.org.

Vertically integrated e-commerce company The Hut Group (THG) has divested its OnDemand division to Newco, which is led by the existing OnDemand management team.

The divesture is part of the strategic review conducted by THG on its loss-making categories and territories as it aims to simplify and streamline operations.

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THG said that it sold the trade and assets of the OnDemand division after an extensive market-testing process to secure optimal value for shareholders.

Newco, which is funded by advisory and investment firm Gordon Brothers, will continue to be a client of THG’s Ingenuity business after the deal.

Earlier this year, the group confirmed its intention to simplify and streamline its operations.

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In addition to the OnDemand division, the e-commerce company sold ‘ProBikeKit’, a provider of cycling equipment, to Frasers Group in the second quarter of 2023.

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The total proceeds from the sale of the two businesses is £4m ($5.1m).

According to THG, the discontinued businesses collectively contributed earnings before interest, taxes, depreciation and amortisation (EBITDA) loss of £14.6m in FY22.

THG CEO Matthew Moulding said: “Through the years, our incubator division OnDemand has cultivated our talent, technology and trading strategies.

“I am delighted to see management and Gordon Brothers continuing the fantastic work of the OnDemand team, and I have no doubt the ProBikeKit business will continue to thrive under Frasers Group. We will remain close partners with both the OnDemand management team and Frasers Group through continued Ingenuity services.”

In April this year, THG reported total revenue of £2.23bn in fiscal year (FY) 2022, up 2.7% compared with £2.17bn in FY21.