The members club group said it ‘fundamentally rejects’ a short seller report by GlassHouse Research, which accused Soho House of being ‘a company with a broken business model and terrible accounting’.
GlassHouse’s report, entitled Soho House & Co: A company facing an existential crisis, goes on to criticise the group for a ‘persistent lack of profitability’, issues with ‘overcrowding’, and a ‘perceived decline in service quality’.
It concluded that the value of the company after 28 years of losses ‘is a zero’.
According to the FT, Soho House’s share price fell by 19% in intraday trading on Wednesday (7 February) following the report’s publication, but on Friday (9 February) morning the stock bounced back after Soho House released its response.
In its statement, Soho House claimed GlassHouse’s intention was to drive down the company’s stock price for its own benefit.
“Soho House & Co Inc. fundamentally rejects the recent report published by GlassHouse Research, which contains factual inaccuracies, analytical errors, and false and misleading statements, all designed to adversely impact the company's stock price for the benefit of the short-seller,” the statement reads.
“The company is confident in the strength of its business and is focused on executing its strategy.”
Soho House, which operates 41 members clubs worldwide with more than 250,000 members, continued that its board formed an independent special committee in the autumn of last year to ‘evaluate certain strategic transactions, some of which may result in the company becoming a private company’.
The company went public in 2021, floating 18% of its stock on the New York Stock Exchange.
“No assurances can be given that the special committee's assessment will result in any change in strategy, or if a transaction is undertaken,” Soho House added.
“The special committee has engaged legal and financial advisors to assist it with its review.”