THG shares fell in early trade on Thursday as the company released only a very small increase in revenue driven by strength in the beauty division. Unfortunately, the nutrition business proved to be a major drag on the group’s overall performance.
THG Beauty delivered 4.6% growth in 2024, reaching £1.1bn in revenue. The division saw success across skincare, cosmetics and fragrances in the UK. Lookfantastic’s loyalty scheme grew to 2.8m members, with improved customer lifetime value. Notable achievements include becoming the first beauty retailer to partner with The White Company and strong performance during cyber sales periods.
Investors will be disappointed with the poor performance of THG Nutrition, with revenue declining 11.9% to £579.6m. While UK performance improved in Q4, Asian markets struggled due to currency fluctuations. However, offline sales grew 29% through licensing agreements and retail partnerships. The Myprotein brand maintains market leadership in the UK, ranking first in consumer loyalty and brand conversion.
Follwing the demerger of THG Ingenity, the sales of each business unit will be poured over investors for signs the company can produce attractive returns as an e-commerce business.
“There was plenty of excitement about its Ingenuity arm – seen as offering logistics solutions to third parties and compared to the out-of-box solution provided to global supermarkets by Ocado – whose star was very much in the ascendancy at the time. Now the Ingenuity arm has been spun off as a private entity, THG is being judged as a collection of beauty, health and nutrition e-commerce sites,” said AJ Bell investment director Russ Mould.
“There are no guarantees but if the company can start growing its revenue sustainably then it may in time be judged on its own merits and not on the unrealistic yardsticks in place at the time of its IPO.”
“Despite a fourth quarter drop in revenue these are actually performing OK – with the beauty side doing particularly well.”
THG expects mid-single digit revenue growth in 2025, supported by strong prestige beauty demand and anticipated recovery in Nutrition as whey prices normalise. The company aims to reduce capital expenditure to £20m annually and targets progression towards a neutral net cash position.
Investors were unimpressed and shares were down 8% at the time of writing.