Beleaguered Soho House might go private

LONDON – Reports surfaced late last week that New York-listed, London-based Soho House might go back to private ownership. This news comes in response to a report a few days earlier from a short seller report that compared the members club group to WeWork.

“Soho House, a company with a broken business model and terrible accounting, faces material headwinds regarding its future viability as a public company,” the research group GlassHouse reported.

The report claimed the group was “never profitable in its 28-year history, went public to dump on retail investors, all while its debt surged to insurmountable levels.” It also called Soho House “eerily similar to WeWork’s public offering [and] we believe Soho House & Co will eventually meet the same fate as the now defunct co-working space.”

Soho House & Co responded with a statement on Friday stating it “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 company was not contacted for any comment or clarifications prior to the report being released. The company is confident in the strength of its business and is focused on executing its strategy.”

It further stated that a special committee of the board had begun to evaluate “certain strategic transactions, some of which may result in the company becoming a private company” in the autumn.

The company – with 42 Soho Houses, nine Soho Works, The Ned in London, New York and Doha, and more – will report 2023 results next month and said it expects operating results to be in line with the guidance issued on November 10. It added that it will also issue full year guidance for 2024 which will demonstrate expectations for continued growth in membership, revenues and Adjusted EBITDA, as well as positive cash flows from operating activities.

Soho House, led by investor Ron Burkle and founder Nick Jones, also announced on Friday that it would commence a $50 million share buyback program. Board members, which own 74% of the stock, “had been active purchasing shares” at an average price of around $6 a share, the company added.

In response to the announcement, GlassHouse posted on X, writing that “Soho House rejects our report, says it has inaccuracies/errors, but does not list anything.”