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THG reports growing first-half sales and customer numbers but losses widen as it invests to keep price rises below inflation

THG brand Lookfantastic is part of its beauty division. Image: screenshot of

THG (The Hut Group) today reports half-year sales of more than £1bn, and says it now expects to see customers continue to buy online post pandemic, although the trading environment is likely to remain challenging. At the bottom line, its pre-tax losses widened.

The multi-brand business, specialising in beauty, health and wellness, says it plans to keep its growing number of digital and app customers at a “challenging” time by investing to keep price rises below inflation.

THG (The Hut Group) today reports group revenue of £1.1bn in the half-year to June 30 2022. That’s 12.3% more than at the same time last year. Its beauty division (+20% to £552.8m) – which includes Lookfantastic – ranked Leading in RXUK Top500 research – Glossybox, Dermstore, Cult Beauty and Mankind, remains the highest turnover part of the business, followed by nutrition – including Myprotein, Myvitamins and Myvegan (+1.1% to £328.4m), and its Ingenuity business running websites and ecommerce operations for third-party brands is its fastest growing (+21.4% to £104.2m). Ingenuity partners now include Nestlé, Kraft Heinz and Mondelez International, and 44% of its 2020 clients have since added more services. It now works with 212 live client websites, up from 133 a year earlier, with average recurring revenue of £0.16m.

At the bottom line, its pre-tax losses widened to £108.2m, widening from £81.3m last time.

How customers now buy

THG says its apps – now downloaded more than 10m times since launch in 2020 – accounted for 11.4% of first half revenues – up from 5.1% a year earlier. Wider use of apps, says THG, has helped to mitigate rising marketing costs since, “customers acquired at lower costs through this channel typically order more frequently with higher average order values due to regular engagement.”

The retail brand business says its websites saw had more than a billion visitors in the last year, while a 16m strong social media community helps to support average order values (AOVs). AOVs grew by 7% at THG Beauty and 9% at THG Nutrition. Myprotein is to sell through a licensing partnership with Iceland Foods that will start to be less through up to 1,000 shops in the UK, though international franchises and online. 

THG says its own brand pricing power means it can mitigate inflation partly through raising prices, but that it is committed to raise prices slower and lower than inflation in order to protect customers and grow market share. In the coming year it is targeting adjusted EBITDA (earnings before interest, tax and asset write downs) of between £100m and £130m, on revenue growth of between 10% and 15%.

THG chief executive Matthew Moulding says: “The group continues to deliver significant infrastructure development, which in turn has supported market share growth through improved localised service as well as substantial operational savings. The first half of this year saw continued strong customer metrics, with active beauty and nutrition customers now 113% higher on a three-year basis.”

He adds: “Against the tough macro-economic backdrop, we have prioritised our loyal customer base, over maximising near term gross margins focusing on retention and growth of consumers. The strength, resilience and agility of our vertically-integrated business model, coupled with automation, has enabled us to significantly invest in price protection for consumers currently facing unprecedented cost-of-living challenges. Supporting our consumers through 2022 has been offset through reducing 2023 capex, with the board viewing this investment as yielding a better return for shareholders and consumers alike in the near term.”

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