Lookfantastic and MyProtein owner THG is reporting record revenues after a year in which it invested heavily in infrastructure and technology. The group says says automation, apps, delivery improvements and influencers have all contributed to strong fourth quarter sales and record full year revenues.
Its growing Ingenuity business – which builds and operates websites and fulfilment for third party brands – grew quickly as more corporates turned to it to launch brand websites around the world.
The retail and technology group operates its own brand websites – including Lookfantastic, ranked Top50 in RXUK Top500 research – as well as building brands for others via its THG Ingenuity business.
THG today reported group revenues of £711.7m in the fourth quarter of its financial year, to December 31 2021. That’s 29.7% up on the same time last year, and 95.7% ahead of two years ago – before the Covid-19 pandemic.
Full-year revenues of £2.2bn were 37.9% up on last year, and 95% up on two years earlier, according to todays’ fourth quarter trading statement.
THG chief executive Matthew Moulding says: “We are delighted to report significant growth across all divisions during the peak Q4 trading period and to have delivered record annual sales of £2.2billion.”
He adds: “During the year, the group also invested around one billion pounds across infrastructure, technology and M&A to further develop the long-term growth prospects of our key trading divisions. We remain committed to our strategy of investing for growth across our global fulfilment network and technology platform.
“The new year has started well, and we remain confident in delivering our strategic growth plans during 2022 and beyond.”
Service and technology improvements – and the role of influencers
THG spent a billion pounds during the year on infrastructure, technology and acquisitions, and says warehouse automation, faster delivery and later last order times all helped to boost online orders. App users, who have downloaded THG apps 6.8m times since 2020, now account for 7% of the group’s direct to consumer sales – and tend to make larger and more frequent orders.
In the fourth, Christmas, quarter, the fastest two year growth was at THG Beauty (+127.4%) – which includes Lookfantastic and Cult Beauty. THG Beauty sales grew by 36.7% on the same time last year, as shoppers placed six orders a second during the November peak trading period. Shorter delivery times at Dermstore in the US and next-day delivery cut off times extended by seven hours for Cult Beauty UK shoppers, thanks to strong courier relationships, also helped to boost sales. Japanese shoppers bought from THG Nutrition on Singles Day, helping to boost fourth quarter sales by 8.1% to £171.8m. Influencers also played a significant role in marketing, generating about 23% of nutrition sales during November 2021, and about 11% of total direct-to-customer sales during the year – up from 9% two years earlier.
THG says that revenue from returning Lookfantastic and Myprotein customers represented 80% of sales in the full year. At the same time, the number of new customers grew by 89% compared to two years earlier.
Building more websites for third-party brands
The Ingenuity business saw the fastest fourth quarter year-on-year growth, at 41.8%. By the end of the quarter – and the year – the Ingenuity business had 187 live client websites, up from 163 at the end of the third quarter, and 133 at the end of the second quarter. That growth in numbers “was driven by enterprise-scale corporates across a diverse range of categories, with over 75% of live sites in major international territories” including the UK, US, Europe, China, Japan and Australia.
In the full-year, Ingenuity Commerce revenues reached £45.4m, up by 135.2% on two years earlier.
Moulding says: “The operational resilience and performance of our Ingenuity infrastructure was a highlight, dispatching over one million units per day at peak periods. The investment we have made in automation in the UK delivered year-on-year efficiencies, and we are on track to launch our first AutoStore facility in the US during Q2 2022, supplementing the six warehouses added to the network across three continents during 2021.”
In 2022, THG expects to see revenues rise by between 22% and 25%, as Ingenuity Commerce grows sales to between £108m to £112m thanks to a “substantial” pipeline of upcoming site launches. On the other hand, the business also expects that the first part of the year will be more challenging since comparisons will be with a period in which shoppers around the world were locked down – and often went online to shop – while commodity prices for its nutrition division are at “record” levels. However, it expects that profitability will improve as investment in automation made last year offsets inflationary pressures.