THG revenues drop but says overall sales "gradually improving"

THG, the owner of Cult Beauty and Lookfantastic, has reported a 9.3% decrease in revenue to £969.3 million as inflationary pressures provided "significant" challenges.

It was also attributed to "the strategic exit of non-core divisions and discontinued categories, short-term volume reductions within beauty manufacturing, de-emphasis in certain beauty markets and proactive pivoting of the THG Ingenuity strategy".

For the first half, THG shared the following division results:

• THG Beauty revenue down 10.4% to £538.7 million.
• THG Nutrition revenue up 2.6% to £340.7 million.
• THG Ingenuity revenue down 16.3% to £320 million.

Losses deepened to £99.5 million, compared to £89.2 million in the first half of 2022. This reflects a £26.2 million one-off, non-cash charge related to the sale of its loss-making categories and non-core assets. Without this charge, operating loss improved by £15.9 million.

Looking ahead, THG said overall sales trends are "gradually improving", with third quarter revenue anticipated to be marginally ahead of the second quarter.

It also expects full-year revenue to be between 0% to -5%. THG said operational leverage, incremental cost efficiencies and commodity price improvements will support further margin recovery in FY24.

Matthew Moulding, CEO of THG, said: "Inflationary pressures provided significant challenges to consumers and businesses alike over the past 18 months. Our strategy of supporting our consumers through 2022, sacrificing margins in the short-term, is bearing fruit.

"The beauty division was held back by short-term global de-stocking impacting manufacturing volumes. The situation has now started to reverse with the beauty division returning to growth since August, at the same time margin progression continues.

"Recent progress within our beauty division has also been more encouraging, underpinned by strong performances in the group’s Perricone MD and ESPA brands, as well as across Cult Beauty."