THG reports record sales and acts to improve profitability

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THG, the online group that owns a raft of health and beauty brands, has posted record annual sales of £2.25bn but warned on earnings.

Matt Moulding_DSF7946

Source: Peter Searle

The Hut’s Matt Moulding has reported record sales

The retailer, formerly known as The Hut, also said it has taken “comprehensive cost action to increase profitability”.

Revenue growth at group level was 4.1%, including a 9.4% rise in THG Beauty and THG Nutrition primary territories.

The retailer said it has “commenced a strategic review of trading activities outside of THG Beauty, THG Nutrition and THG Ingenuity” and that “while the decision to discontinue certain trading activities has occurred already, the full outcome of the review will complete” in the first half of 2023.

THG reported that “the combined impact of the lower full-year sales outturn, the dilutive impact of loss-making categories under review, alongside the timing of impending new Ingenuity contracts” results in adjusted EBITDA expected to be between £70m and £80m for 2022. Previously the figure had been anticipated to be as much as £130m.

Chief executive Matt Moulding said: “In a year that presented numerous challenges across the world, I’m proud that the THG team has delivered another record revenue performance.

“Among many highlights, I’m especially pleased with the progress of Ingenuity, successfully competing with major global technology giants to transform digital operations for global retailers and brands.

“With the completion of the divisional reorganisation and around £100m of annual efficiency savings already delivered, the group enters 2023 with strong momentum to achieve substantial margin expansion.

“Core commodity prices used within our nutrition division have seen significant deflation since their record highs in 2022, giving us confidence in significant profit progression as we move through the year ahead, against a much-reduced group cost base.

“We remain highly confident of delivering adjusted EBITDA margins in excess of 9% over the medium-term … we are well positioned for further operational and strategic progress, notwithstanding the continued macroeconomic uncertainty.”