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Business News Retail
The Hut planning IPO
By CMU Editorial | Published on Friday 1 July 2011
Internet retailer The Hut Group, which operates various online mail-order operations, and which bought the Zavvi name after the high street store’s collapse, is planning an IPO in a bid to raise about £100 million, according to the Financial Times.
The Hut Group is best known for its offshore entertainment retail operations, and has benefited greatly from the much previously reported VAT loophole, that allows such operations that are based on the Channel Islands to sell CDs and DVDs without charging sales tax, giving them a 20% advantage over mainland operators.
As previously reported, after years of lobbying by some current and former mainland music sellers, there are moves to close that loophole, possibly by banning CDs and DVDs from enjoying the tax relief, a move which would definitely hit The Hut. Which is possibly why the company is keen to stress that entertainment products now account for a tiny portion of its overall sales and revenues.
The FT have quoted one analyst who reckons The Hut is hoping to cash in on recent City interest in digital businesses with their part flotation. Said analyst says: “The retail environment is tough, but The Hut will try and compare themselves to online clothing retailer Asos, and successful tech IPOs from the likes of LinkedIn and Groupon. They have some quite punchy shareholders, but whether they can achieve an Asos-style valuation multiple remains to be seen”.
