THG sales jumped by 41% thanks to beauty and nutrition businesses
THG (LON:THG) (The Hut Group) posted a substantial loss for 2020 after baring the cost of more than £300m for share-based payments to staff, although the company said its trading in Q1 had surpassed its expectations.
Even prior to its flotation last September, equity participation for staff was commonplace, as most of the share plans have vested in full owing to the strong performance of the shares, which have jumped by 40% since listing.
Subsequently, the group booked a non-cash charge of £332m to reflect the value of the awards. In addition to the £105m impairment charge on assets held for sale, a £45m pre-exceptional profit wa turned into an operating loss. Sales rose by 41%, thanks in the most part to its core beauty and nutrition businesses.
Russel Pointon, director of consumer and media at Edison Group commented:
“Beauty and nutrition products helped THG return strong financials for the twelve months ending December 31. Excluding non-cash and one off adjustments, the online retailer had underlying profits of £45.5m for the year as against £33.5m over the course of 2019. It also registered growth across all divisions of the company. This has continued in Q1 2021 with revenue growth up 58.2% on 2020.”
“These figures paint an encouraging picture for the future, despite the fact that lockdowns ending will mean increased competition from brick and mortar retail. But what really catches the eye is the ICON studios the company will be shortly opening up. Based in Manchester, it will be the largest content studio to propel the group’s status as a global leader in the influencer marketing space – it will put the retailer one step ahead of major competition in the push to make online retail more exciting,” Pointon said.
THG, based in Manchester said it was too early in the year to change its forecast for the full-year, but the firm is more confident in its existing guidance of 30-35% revenue growth.
The chief executive of THG will also hand a £100m stake in the company to a new charitable foundation.
“Alongside founder Matt Holding’s substantial £100m share contribution to charity, the broader firm also strengthened its ESG credentials with the launch in 2020 of THG (eco), which includes a scheme whereby the packaging from beauty products can be returned at no extra cost and recycled, thus cutting down on plastic waste,” Pointon added.
THG began trading on the London Stock Exchange in September 2020, raising £1.88bn in the largest UK initial public offering (IPO) since 2015.
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