THG losses deepened by one-off disposal costs

In its interim half-year results, THG said a one-off charge of £26.2m stemming from the disposal of its loss-making OnDemand business deepened operating losses to £99.5m – from losses of £89.2m for the same period in 2022.

However, THG said its adjusted EBITDA was up 45.7% inclusive of the recently disposed of business and increased its adjusted profit guidance for its full year by £100,000 to £50.1m.

THG said it finished the period with strong cash performance ahead of guidance with outflow of £20.6m and £163.1m of capex, and a strong balance sheet with £563m in cash and available facilities.

The brand posted record first-half Nutrition revenue of £340.7m, with adjusted EBITDA of £47.1m. THG Beauty posted adjusted EBITDA of £10.6m.

The retailer said Q3 revenue exit momentum “gives us confidence in full-year continuing revenue growth of 0% to -5%”.

THG chief executive Matthew Moulding said: “Inflationary pressures provided significant challenges to consumers and businesses alike over the past 18 months. Our strategy of supporting our consumers through 2022, sacrificing margins in the short term, is bearing fruit. This is reflected in the strong H1 results we’ve posted today, across adjusted EBITDA and cash.

“The cash performance of the group has been strong in H1, but also over the last 12 months. Group cash flow performance improved by £350m compared to the previous 12 months, reflecting the completion of our global infrastructure roll-out programme, with the group now achieving significant operating leverage from a well-invested, automated, global platform.

“Our Nutrition division delivered record H1 revenue performance and, with inflationary pressures easing, posted substantially higher EBITDA margins year on year as we exited H1.

“The early results from the Myprotein rebrand are also encouraging as we’ve taken steps to further enhance the premium nature of the world’s number-one online sports nutrition brand. These actions should provide for both increased partnership opportunities and category expansion, supporting our ambition of building Myprotein into a global lifestyle brand.

“Recent progress within our Beauty division has been more encouraging, underpinned by strong performances in the group’s Perricone MD and ESPA brands, as well as across Cult Beauty. Margin improvements have steadily built through H1, as focus shifted to orders that deliver immediate profitability, where we benefit from the economies of scale associated with our local distribution hubs.

“The Beauty division was held back in H1 by short-term global de-stocking impacting manufacturing volumes. The situation has now started to reverse with the Beauty division returning to growth since August, at the same time margin progression continues.

“Finally, Ingenuity’s pivot to larger, more complex Enterprise clients is gaining momentum, reflected in some key client wins and a strong pipeline. We were thrilled to be listed in the Gartner’s Magic Quadrant™ for Digital Commerce, in recognition of our ability to provide an all-encompassing direct-to-consumer journey, cementing Ingenuity as a key partner for enterprise clients seeking comprehensive commerce excellence.”