THG today reported full-year sales up by 41% after shoppers shifted online during Covid-19 lockdowns to buy the beauty and nutrition product its brands sell. At the same time, a growing number of brands used its technologies in order to develop their own digital capabilities.
But at the bottom line, it reported a pre-tax loss as it handed equity to its staff following its stockmarket flotation.
The company, previously known as The Hut Group, is less than a year into trading as a publicly listed company and has also seen disruption as a result of the Covid-19 pandemic. It says its purpose is now to “reinvent how brands digitally connect to consumers global; and to be best in class at building, growing and accelerating brands in order to deliver long-term sustainable growth for its shareholders.”
THG says that while shoppers have shifted online during the pandemic, it expects that shift to be a long-term one thanks to the wider product range and depth of information now available online.
The company, whose stable of 15 brands includes Zavvi, MyProtein, Lookfantastic and Coggles, today reports sales of £1.6bn in the year to the end of March – 41.5% up on the same time last year. Its beauty division continued to be the largest part of the business, with sales of £751.6m up by 57.1% on the same time last year. Nutrition brand sales of £562.3m were 36.2% ahead of last year. Some 61% of sales were international, with 20% of sales now coming from the US market.
The retail group is now seeing significant sales growth from the services it supplies to third party brands. Its Ingenuity division brought in revenues of £137.3m (+7.3%) – including sales of £19.3m (+160.4%) in revenue from its commerce platform, after the number of live sites it supports grew by 324%. Its on-demand division – which delivers personalised and customised products to customers of websites including Zavvi, IWOOT (I Want One of Those) and Pop in a Box – made sales of £101.3m (+69.1%).
Over the last year it spent £102m on three acquisitions, Perricone MD, David Berryman and Claremont, and so far this year has bought Dermstore. More acquisitions are expected, with £400m set aside for the purpose in its current financial year.
The group reported a top-line pre-tax loss of £7.3m, but one-off costs including transferring equity of £331.6m to staff took bottom line pre-tax losses to £534.6m – widening from a loss of £45.2m last year.
THG added 10.7m new customers during the year, including nutrition (+41%) and beauty (+58%) customers as well as subscribers to its beauty boxes (+39%).
In the first quarter of the current financial year, the retailer reported group revenue of £447.3m (+58.2%), including £26.4m (+114%) from its THG Ingenuity business. It also bought the Dermstore brand.
Last year the group launched THG (eco) to drive its action plan on sustainability, with a long-term vision to take a closed loop approach to waste and reduce energy use. This is also available to its Ingenuity clients.
Matthew Moulding, founder and chief executive of THG, says: “Our global D2C brand building capabilities and proprietary Ingenuity technology platform has enabled us to further develop both our external brand relationships, and our expanding portfolio of beauty and nutrition own brands. Leveraging the platform to build an impressive client base of blue-chip consumer brands has been a highlight of the year, supported by encouraging momentum in the current year Ingenuity Commerce pipeline.
“Management’s purpose for the IPO was to step change THG’s access to funding in order to capitalise on Covid-19 accelerated market changes. As we progressed through 2020, those changes became more apparent in terms of the volume and scale of opportunities available to the Group, as evidenced by the c. £400m committed to acquisitions since IPO, most notably the acquisition of Dermstore in the US.
“After highlighting our commitment to reducing the environmental impact of group operations with the launch of THG (eco) in 2020, we have announced significant investment to support the group’s strategy to off-set existing usage and footprint. Plastics are a real and immediate problem for THG’s operational sites, our consumers, and for Ingenuity partners. We are investing in best-in-class plastic recycling operations that at first help us off-set our plastic footprint, but in time enable us to close the loop and re-use the plastic we process within THG directly.
“We have delivered exceptionally well on our commitments at IPO and we move forward with purpose, to advance our strategy with investment in talent, infrastructure, THG (eco) and targeted M&A, and to continue to deliver growth on a global scale.”
In the wake of THG’s IPO, which gives Moulding and his wife 24% of the issued share capital, he has waived his salary and will give shares worth £100m to charity via family charity The Moulding Foundation.