THG battles full-year and Q1 headwinds but is upbeat for the future

THG’s full-year results and Q1 trading update came with plenty of negative numbers but the company was upbeat overall about “a transformative year, marked by further strategic progress and operational resilience and balance sheet deleveraging”.

The firm’s shares fell 3% Tuesday morning after it said FY24 revenue pre-demerger (its Ingenuity ops were spun out as a separate company last year) rose 1.1% to £1.88 billion and adjusted EBITDA was in line with guidance and consensus.

Within that, THG Beauty rose 3.3% at actual exchange rates and 4.6% at constant currency (CC) to £1.108 billion while Nutrition fell 11.9% actual and 8.7% CC to £579.8 million. Post-demerger revenue fell 2.5% actual and 0.4% CC for the company as a whole.

THG Ingenuity’s revenue was up 16% actual during the year and 16.4% CC to £191.9 million.

Post-demerger adjusted EBITDA for THG fell 17.2% to £92.1 million.

And in Q1 of this year, group continuing revenue fell 6.1% at constant currency to £371.4 million with like-for-like revenue down 3%.

The first quarter saw THG Beauty revenue falling 10% actual or 9.8% CC to £223.6 million as comparisons with last year proved tough, while the Nutrition ops returned to CC growth, albeit at just 0.1% on that basis and down 2% actual. Sales were £147.8 million.

CEO Matthew Moulding said: “2024 was a big year of change and evolution for THG, the highlight of which was the demerger of the group’s technology division, THG Ingenuity at the end of the year

“We are now fully focused on THG Beauty and THG Nutrition, and I’m proud of the progress each business has made. THG has become a much leaner, fitter group that has shown strong resilience in the face of record whey commodity pricing that placed temporary pressure on Nutrition margins. A strong performance across our Beauty business, delivering ahead of its medium-term adjusted EBITDA margin target, helped the group to deliver a pre-demerger adjusted EBITDA margin ahead of 2023 despite the transitory headwinds in Nutrition.

“In the first quarter of this year, THG Beauty was up against a comparative period including an early Easter which is a key trading event, and an extra day’s trading. However, in its home UK and US markets, Beauty retail is trading resiliently, with a strong selection of new brand launches planned throughout the year.”