THG has strong Q4 as Beauty and Ingenuity units soar, but margin forecast disappoints

By

Sandra Halliday

Published
Jan 18, 2022

THG’s Q4 trading update on Tuesday showed that the group’s shares may have been under heavy pressure in recent months but its sales continue to soar.

In the last three months of 2021, group revenue rose 29.7% on the year and 95.7% against two years ago to reach £711.7 million.

And it expects “strong” revenue growth for this year, forecasting a rise of between 22% and 25%, including £108 million to £112 million in revenue for its Ingenuity Commerce third-party e-tail solutions business.

Looking at the individual divisions in Q4, its largest business — THG Beauty — saw revenue rising 36.7% on the year to £407.9 million, which was a 127.4% rise on two years ago.

THG Ingenuity rose 10.9% on the year to £46.5 million and 101.1% on a two-year basis. Within this, Ingenuity commerce revenue more than doubled in a year to £15.4 million and was up 415% over two years. 

For the full year, group revenue soared 35% to £2.178 billion and was up 91.1% over two years. THG Beauty rose 48.5% on the year to £1.116 billion and was up 133.4% compared to 2019. THG Ingenuity rose 41.4% in a year to £194.3 million and 51.8% in two years. And Ingenuity Commerce was up 135.2% in a year to £45.4 million and up 512.3% in two years.

Those were all impressive figures, but the company's struggling share price still dipped further in early morning trading as it missed analysts' expectations on margins.

But it said that while the early part of 2022 is “expected to be a more challenging comparable period due to global lockdowns in H1 2021”, and higher commodity prices, the board expects adjusted EBITDA margins to improve throughout the year. This will come as it sees the benefits of 2021 investments in automation offsetting inflationary pressures, in addition to the increasing mix of revenues generated from Ingenuity Commerce. 

And CEO Matthew Moulding was upbeat overall. He said: “The operational resilience and performance of our Ingenuity infrastructure was a highlight, dispatching over one million units per day at peak periods. The investment we have made in automation in the UK delivered year-on-year efficiencies, and we are on track to launch our first AutoStore facility in the US during Q2 2022, supplementing the six warehouses added to the network across three continents during 2021. The new year has started well, and we remain confident in delivering our strategic growth plans during 2022 and beyond.”

Momentum coming into 2022 “remains strong across the group following an acceleration in organic revenue growth in Q4 vs. Q3 2021 and with a substantial pipeline of site launches within THG Ingenuity”.