Ingenuity warehouse
THG faces an uphill battle to be seen as a credible business with investors / Image source: THG
  • Health and beauty platform runs up £26.2 million in one-off charges
  • Sales fall 9.3% reflecting low-quality business exits
  • Company claims sales trends ‘gradually improving’

Shares in THG (THG) tumbled 16% to 74p on Thursday after the digital commerce platform posted widened losses for the half ended 30 June 2023 and lowered its revenue target amid inflationary pressures and the impact of temporary de-stocking on its beauty division.

This overshadowed better than forecast first half adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) and cash generation from the online beauty and nutrition products company formerly known as The Hut, which continues to face an uphill battle to be seen as a credible business with the market.


First half results from the Manchester-headquartered firm revealed an encouraging 22.9% rise in adjusted EBITDA from continuing businesses to £50.1 million.

That was above the top end of the previously guided £47 million to £50 million range and THG also highlighted its better than forecast cash generation.

However, decisive actions by the management team led by CEO Matthew Moulding to dispose of non-core assets and loss-making discontinued categories drove a £26.2 million one-off charge, which widened the group operating loss from £89.2 million to £99.5 million.

Investors were also unimpressed by a 9.3% slide in group sales to £969.3 million, which reflected the exit from non-core businesses as well as a decline in revenues at THG Beauty, which has consciously prioritised higher-margin sales.

Also at play was the ongoing strategic repositioning of the group’s THG Ingenuity division, which is now focusing on higher value, higher margin clients.


Following the unwind of a period of unusually high whey prices, margins in the THG Nutrition business improved substantially to 13.8% on record first half sales.

Moulding said: ‘The early results from the Myprotein rebrand are also encouraging as we’ve taken steps to further enhance the premium nature of the world’s No1 online sports nutrition brand. These actions should provide for both increased partnership opportunities and category expansion, supporting our ambition of building Myprotein into a global lifestyle brand.’

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THG stressed that overall sales trends are ‘gradually improving’ into the second half, with third quarter continuing revenue expected to be ‘marginally ahead’ of the second quarter with a notable step-on in THG Beauty and THG Ingenuity.

Moulding also explained that the de-stocking hurting THG Beauty has now started to reverse with the division returning to growth since August with margins continuing to improve.


AJ Bell investment director Russ Mould commented: ‘Another period of operating losses and with more moving parts than a Swiss watch, it’s no wonder that investors struggle to get their head round exactly what this company is trying to do. The word “adjusted” is used 118 times in the half-year results, which says it all.’

Mould continued: ‘The nutrition business looks to be improving, helped by inflationary pressures easing. It wants to build sports nutrition brand Myprotein into a global lifestyle brand – notably, this part of its business has been the focus of activist investor Kelso which has called it one of THG’s undervalued assets.

‘THG seems to realise that something has to change if it is to win over the market’s favour, hence the recent disposal of two loss-making businesses. That reinvention journey needs to speed up if wants the share price to move higher. As it stands, the latest results went down like a lead balloon with the market, the shares falling nearly 18% in the first hour of trading.’

Edison’s Neil Shah said it is ‘crucial to remember THG’s journey post its monumental $7 billion London IPO in 2020. The brand has faced multiple obstacles, from profit warnings influencing its share prices to various takeover bids, all of which have been declined. It will be interesting to see how THG’s strategies unfold amidst these complex market dynamics.’

Disclaimer: Financial services company AJ Bell referenced in the article owns Shares magazine. The author of the article (James Crux) and the editor of the article (Steven Frazer) own shares in AJ Bell.


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Issue Date: 14 Sep 2023