THG returns to growth as it signs new Holland & Barrett partnership
THG has reported a 1.1% increase in continuing revenue to £597.9 million for the year ending 31 December 2023, marking its best quarterly performance of FY23.
Following the sale of its OnDemand division earlier in 2023, the group completed its strategic review of non-core categories in the second half, resulting in the discontinuation of small legacy brands within THG Beauty and THG Nutrition.
From Q4 2023, continuing revenue excludes the discontinuation of these brands, accounting for £40 million (c.2%) of group revenue in FY23.
THG Beauty delivered revenue growth of 2.6% during the fourth quarter, primarily driven by Perricone MD, ESPA and Cult Beauty.
Its performance in the UK, which accounts for over half of total beauty revenue, saw revenues rise 9%. This was largely helped by continued improvements in delivery times through fulfilment automation.
THG Ingenuity was strengthened by the decision taken in 2022 to introduce more complex, higher margin enterprise clients, with external clients delivering double-digit revenue growth in November and December.
Progress in onboarding enterprise clients continued throughout 2023, signing major brands including L’Oreal, Access Corporate Group and PepsiCo, while broadening partnerships with Asda and Mondelez.
Today, the group also announces a new agreement with Holland & Barrett to provide D2C operational services, taking advantage of THG’s automated distribution facilities, fulfilment and courier management services to support its ecommerce business.
Matthew Moulding, CEO of THG, said: "Holland & Barrett is one of the UK’s largest health and wellness retailers, and a major online player.
"We’re delighted to be supporting their ecommerce ambitions through underpinning their operational efforts for D2C fulfilment and courier management services, directly into their customers hand.
"This is a true demonstration of how THG Ingenuity can provide incremental services to established brands, delivering operational excellence, becoming world class at a fraction of the cost and in a fraction of the time."
Looking ahead, THG said its exit momentum from 2023 "underpins our confidence in all divisions delivering growth in FY24".
The group continues to monitor developments in the Red Sea region and anticipates minimal impact on stock availability. To date, the financial impact is not considered to be material.
Moulding added: "2023 was a year that threw up many challenges for all businesses, and I’m delighted in how the group not only responded to these challenges, but grew stronger through the year.
"The return to revenue growth for both our beauty and external Ingenuity clients were clear Q4 highlights, especially given the number of changes made to their business models over the past 18 months.
"But arguably the most pleasing performance came from our recently automated global fulfilment network. Q4 order volumes were delivered in record times, with average global delivery times reduced by one day. These widespread service improvements were achieved alongside a meaningful reduction in the cost of fulfilment.
"Whilst the economic background remains uncertain there are some optimistic signs, with cost-of-living pressures set to ease further in 2024. We are confident that the investments and decisions made throughout the year position the group well to build upon the positive exit momentum."