E-commerce powerhouse THG disclosed on Tuesday that its fourth-quarter results, encompassing the period up to December, aligned with expectations and guidance. Notably, the company saw a return to revenue growth in Q4 for its continuing businesses, registering a modest 1.1% uplift following the divestment of its OnDemand division and strategic streamlining of non-core categories.
With a robust balance sheet boasting approximately £600 million in cash and available facilities, THG also unveiled a pivotal partnership with retailer Holland & Barrett through its Ingenuity operation.
Breaking down the numbers for the primary THG operation, Q4 group revenue reached £597.9 million. Although full-year continuing revenue experienced a 2.9% decline to £1.98 billion, the company emphasized positive trends in its ongoing Beauty and Ingenuity businesses.
The Beauty operation witnessed a 2.6% revenue increase on a continuing basis in Q4, totaling £387.1 million. However, annual revenue dipped by 4.3% to £1.17 billion. Simultaneously, the Ingenuity business, offering end-to-end e-commerce services, observed an 8.1% rise in external revenue in Q4 (£44.3 million) but faced a 3.3% contraction for the full year (£153.7 million).
THG commended its best quarterly revenue performance in Q4, with a spotlight on the success of its Beauty operation. Accelerated growth in App penetration played a pivotal role, generating valuable first-party customer data and reducing reliance on paid marketing channels. The company underscored operational excellence, emphasizing increased automation in order processing, leading to substantial cost savings per unit.
Positive trends observed in Q3 extended into the final quarter, with standout performances from THG’s own brands, including Perricone MD and ESPA, and its retail platform Cult Beauty. The acquisition of the American beauty brand Biossance in December 2023 is anticipated to contribute to sustained success in the current year.
In the UK, constituting over half of total Beauty revenue, Q4 demonstrated «especially strong» performance with a 9% revenue growth. Improvements in delivery times and increased App sales, reaching 14.7% compared to 10.8% a year earlier, contributed to this success.
Addressing challenges faced in the first half, including industry-wide de-stocking, THG reported that these issues diminished in the latter half of the year.
Regarding Ingenuity, Q4 marked the realization of the company’s decision in 2022 to pivot towards more complex, higher-margin enterprise clients. Major signings, such as L’Oréal and an expanded partnership with Asda, underscored the success of this strategic shift.
The newly announced partnership with Holland & Barrett positions THG to provide D2C operational services, contributing an expected £175 million of incremental GMV to the Ingenuity operations and technology platform in 2024.
CEO Matthew Moulding expressed confidence in the company’s performance for the upcoming year, expecting growth. Further details will be provided alongside preliminary results in April. Moulding stated, «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.
