The Hut Group sees strong Q4 revenue growth but shares fall on cautious outlook for 2022

The Hut Group, owner of brands including Coggles, Lookfantastic and AllSole, has published its Q4 trading results, revealing revenue reached £711.7 million, an increase of +29.7% compared to 2020. But shares fell today on a cautious outlook for 2022.

Matthew Moulding, THG's CEO said the group was delighted to report "significant growth across all divisions", with full year 2021 revenues reaching £2.2 billion, an increase of 37.9% year-on-year and 95% compared to two years ago. 2021 also marked the Group's first full year as a public company.

THG Beauty in particular recorded a Q4 sales growth of +38.9%, translating into six orders per second placed during its peak digital trading period. The segment recorded a full year 2021 revenue of £1.1 billion, half of the group's total revenue. THG Beauty owns eight brands across skincare, haircare and cosmetics and sells more than 1,000 third-party beauty brands through its digital outlets.

The Group's full year 2021 adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin is expected to be in the range of 7.4 to 7.7%, compared to market expectations of about 7.9%, with the group citing inflationary pressures.

The strong revenue growth is expected to continue in the full year of 2022, with the company forecasting a 22 - 25% year-on-year increase.

During the financial year, the group invested around £1 billion pounds across its infrastructure, technology and M&A to further develop its long-term growth prospects of its key trading divisions, the statement said.

Moulding commented: "The operational resilience and performance of our Ingenuity infrastructure was a highlight, dispatching over one million units per day at peak periods. Despite challenging conditions, we have scaled revenue and expanded our business model, particularly THG Ingenuity, well ahead of expectations given at our IPO 16 months ago.

"The new year has started well, and we remain confident in delivering our strategic growth plans during 2022 and beyond."

However the group said it expects sales growth to slow to between 22% and 25% over 2022, causing its shares to slide today by nearly 10% to 167.7p. Its also warned over lower-than-expected profit margins for 2021 due to currency movements and rising costs.

The group said foreign exchange changes are set to leave underlying profit margins lower than forecast, though it expects this to recover over the year as investment in automation and new client wins offset cost pressures.