H1 - 2024 | Half-Year Results | 17 September 2024 |
T H G B E A U T Y
T H G N U T R I T I O N
T H G I N G E N U I T Y
H1 2024 Highlights
Continued focus on profitable sales
- Performances in both Beauty and Ingenuity helping to offset transitory rebrand and FX headwinds in Nutrition
- Gross margin encouraging considering the sales mix towards Beauty from Nutrition
- Further optimisation of fulfilment network, significantly lowering distribution costs
- Focus on cost management supporting stable adjusted EBITDA margin (5.7%)
- Continuing Group adjusted LTM EBITDA of £121.8m
- Further reduction in capex spend
- Successful execution of the Group's strategic review, with discontinuation and exit of non- core categories including sale of luxury portfolio
All three businesses successfully executing strategic priorities
- THG Beauty - well positioned for structural growth in retail with manufacturing normalising
- THG Nutrition - compelling offline growth with impactful global partnerships increasing brand awareness, mitigating online challenges
- THG Ingenuity - demonstrable progress in fulfilment services with growth in new and existing clients, on track to self-funding target
C O N T I N U I N G R E V E N U E
£911.1m, +2.2%(1) YoY(2)
G R O S S M A R G I N 42.4%,(3) -20bps YoY
D I S T R I B U T I O N C O S T S 11.5% of revenue vs. 13.7% in H1 2023(3)
C O N T I N U I N G A D J U S T E D E B I T D A £52.3m vs. £51.5m in H1 2023
C O N T I N U I N G A D J U S T E D
E B I T D A M A R G I N
5.7% vs. 5.7% in H1 2023
C A P E X
5.8% of revenue vs. 7.4% in H1 2023
N E T L E V E R A G E (4) 2.9x vs. 2.9x in H1 2023
H A L F - Y E A R R E S U L T S
Half-Year | Notes: [1]All comparative figures are on a continuing, CCY basis unless stated otherwise. [2]YoY defined as year -on-year. [3] H1 2023 includes a reclassification of £10.9m between cost of sales and distribution costs to give comparable YoY numbers for a presentational item. [4]Net | 2 |
Results 2024 | leverage defined as the ratio of net debt (loans (excluding lease liabilities), less cash and cash equivalents) to continuing adjusted EBITDA as at June 2024. | |
Half-Year Results 2024
Group Financial Review
H1 2024 revenue performance
- Group continuing revenue £911.1m, +2.2%(1)
- THG Beauty continued to execute its market prioritisation strategy, delivering revenue growth of +6.9%
- Challenging online THG Nutrition performance mainly as a result of stock rotation to rebranded products (affecting ASPs), and within Asia where FX headwinds are most pronounced. Strong offline growth partially offsetting transitory rebrand disruption
- Robust performance within THG Ingenuity with double-digit revenue growth from external clients (+14.1%)
Continuing revenue by territory and business
12%
27% | |||||
17% | |||||
50% | UK | 47% | Beauty | ||
Europe | |||||
Nutrition | |||||
USA | |||||
Total Ingenuity | |||||
20% | ROW | 26% | |||
G R O U P | ||||||
YoY(2) | CCY | |||||
F I N | ||||||
£'m | H1 2024 | H1 2023 | Change | Change | ||
A N C | ||||||
THG Beauty | 531.1 | 502.5 | +5.7% | +6.9% | ||
I A L | ||||||
THG Nutrition | 299.9 | 336.7 | -10.9% | -7.5% | ||
R | ||||||
E V I E | ||||||
THG Ingenuity (external) | 80.2 | 71.2 | +12.6% | +14.1% | ||
W | ||||||
Group revenue (continuing) | 911.1 | 910.4 | +0.1% | +2.2% | ||
Discontinued revenue | 22.9 | 58.8(3) | -61.2% | -60.7% | ||
Group revenue | 934.0 | 969.3 | -3.6% | -1.7% | ||
THG Ingenuity (internal) | 225.6 | 248.8 | -9.3% | -9.3% | ||
THG Ingenuity Total | 305.8 | 320.0 | -4.4% | -4.2% | ||
Half-Year | Notes: Above numbers and table subject to rounding. [1]All comparative figures are on continuing, constant currency basis unl ess stated otherwise. [2]YoY defined as year-on-year statutory sales growth. [3]H1 2023 reported sales was £950.6m Continuing, £18.7m Discontinuing - | 4 |
Results 2024 | the above figures are restated for comparative purposes by £36.1m within THG Beauty (of which £18m was THG Luxury) and £4.0m within THG Nutrition to include categories which have been discontinued in H2 2023 and H1 2024. | |
H1 2024 profitability
- Gross profit margin remained broadly stable, with Beauty and Ingenuity margin progression partially offsetting THG Nutrition input cost inflation
- THG Beauty margin expanded through online retail, as previous actions to de-prioritise lower margin territories and products have come to fruition
- Substantially reduced distribution costs as a % of revenue
- Administrative costs remain elevated with wage inflation a key factor. Organisational effectiveness initiatives implemented in Q3 will further rationalise Group headcount going forwards
- Ongoing refinements to marketing strategies and greater app participation will also help to offset inflation in marketing and demand generation investment to enhance brand awareness
- Further successful exit of loss-making categories
G R O U P | ||||
% | ||||
F I N | ||||
£'m | H1 2024 | H1 2023 | Change | |
A N C | ||||
Revenue | 934.0 | 969.3 | -3.6% | |
I A L | ||||
Cost of sales(1) | (538.3) | (556.0) | +3.2% | |
R | ||||
E V I E | ||||
Gross profit | 395.7 | 413.3 | -4.3% | |
W | ||||
Gross margin% | 42.4% | 42.6% | -20bps | |
Distribution costs | (107.5) | (132.8) | +19.0% | |
% of revenue | 11.5% | 13.7% | +220bps | |
Administrative costs | (239.3) | (233.3) | -2.6% | |
% of revenue | 25.6% | 24.1% | -150bps | |
Adjusted EBITDA | 48.8 | 47.1 | +3.6% | |
Adjusted EBITDA% | 5.2% | 4.9% | +30bps | |
Continuing adj EBITDA | 52.3 | 51.5 | +1.6% | |
Continuing adj EBITDA% | 5.7% | 5.7% | 0bps | |
Half-Year | Notes: Above numbers and table subject to rounding. [1] Cost of sales, Gross profit, Distribution and Administration costs are stated before the impact of adjusting items, depreciation and amortisation. | 5 |
Results 2024 | ||
Substantially reduced distribution costs as a % of revenue
G R O U P F I N A N
- Reflecting the continued optimisation of the Group's automation investment and ongoing efficiencies in the global delivery network
- Cut off for next day delivery in the UK extended to market-leading 1am
- Ahead of target for c.50% of global orders to be processed using robotics and automated technology in 2024
- New advanced automation installed in Q3 2024 (Omega, UK) to enable additional capability
- Operational efficiency and market leading service standards are now playing an impactful role in supporting Ingenuity recurring revenue growth
20.0% | ||
18.0% | H1 2020 | H1 2021 |
H1 2022 | ||
16.0% | ||
14.0% | H1 2023 | |
12.0% | H1 2024 | |
10.0% | ||
8.0% | ||
6.0% | ||
4.0% | ||
2.0% | ||
0.0% |
C I A L R E V I E W
Half-Year | Notes: Above numbers and table subject to rounding. | 6 |
Results 2024 | ||
THG Beauty financial highlights
- Stand-outperformance delivered by THG Beauty following the successful execution of the market prioritisation strategy
- Gross profit discipline and category and brand mix supported EBITDA progression within Retail, alongside increasing share of brand investment
- Beauty loyalty programme and marketing strategy driving a higher mix of spend through cost effective channels
- Volume recovery within beauty manufacturing alongside cost saving initiatives implemented during 2023 has supported margin progression
- Adjusted EBITDA margin of 6.1% in line with medium-term guidance
Revenue by channel | Online retail by territory | |
c.10% | c.24% | c.5% |
c.12%
Retail | UK | |||||
Europe | ||||||
Own-brand | c.16% | |||||
US | ||||||
Manufacturing | ||||||
ROW | ||||||
c.78% | ||||||
c.54% |
G R O U P | ||||||
YoY | CCY | |||||
F I N | ||||||
£'m | H1 2024 | H1 2023 | Change | Change | ||
A N C | ||||||
THG Beauty revenue | 553.5 | 538.7 | +2.7% | +3.8% | ||
I A L | ||||||
Continuing revenue | 531.1 | 502.5 | +5.7% | +6.9% | ||
R | ||||||
E V I E | ||||||
Continued adjusted EBITDA | 32.6 | 12.1 | +169.3% | |||
W | ||||||
Continued adjusted EBITDA % | 6.1% | 2.4% | +370bps | |||
Half-Year | Notes: Above numbers and table subject to rounding. Revenue by channel and online retail revenue by territory presented on a continuing basis. | 7 |
Results 2024 | ||
THG Nutrition financial highlights
- EBITDA incrementally impacted by c.£5m YoY due to continued FX headwinds in Asia
- Local manufacturing recently commenced which will steadily scale to reduce exposure to Japanese Yen FX movements
- Rebrand now largely complete with peak disruption behind us
- Stock rotation into new packaging impacted online ASPs (c.11% lower YoY)
- Offline performance continues to be strong, with a significant increase in retail touchpoints helping mitigate the total brand sales decline to -6.8% CCY.
Revenue by channel | Online retail by territory | ||||
c.18% | |||||
c.15% | c.31% | ||||
Online | UK | ||||
Japan | |||||
(D2C retail, marketplaces) | |||||
Offline | Europe | ||||
c.85% | (B2B, manufacturing) | ROW | |||
c.39% | |||||
c.12% | |||||
G R O U P | ||||||
YoY | CCY | |||||
F I N | ||||||
£'m | H1 2024 | H1 2023 | Change | Change | ||
A N C | ||||||
THG Nutrition revenue | 300.3 | 340.7 | -11.8% | -8.5% | ||
I A L | ||||||
Continuing revenue | 299.9 | 336.7 | -10.9% | -7.5% | ||
R | ||||||
E V I E | ||||||
Continued adjusted EBITDA | 19.6 | 46.9 | -58.1% | |||
W | ||||||
Continued adjusted EBITDA % | 6.5% | 13.9% | -740bps | |||
Rising Inflation in Sweet Whey Commodity Prices(1)
2,000 | ||||
ton | 1,500 | |||
€ per | 1,000 | |||
500 | ||||
2021 | 2022 | 2023 | 2024 |
-
Half-Year | Notes: Above numbers and table subject to rounding.[1] Source: https://www.clal.it/en/index.php?section=whey. | 8 |
Results 2024 | ||
THG Ingenuity financial highlights
- Monthly external recurring revenue continued to accelerate throughout the period (+33% YoY in June), underpinned by growth in existing and new clients
- Fulfilment remains highest growth solution with strong pipeline momentum
- Double-digitexternal revenue growth notwithstanding strategic exit of legacy clients
- Total revenue growth reflects the reduction in volume from internal clients including discontinued categories, plus lower distribution recharges (efficiency driven)
- Evolution of revenue mix towards external clients supports margin progression and self-funding target
Revenue by solution(1)
39%
41%
21%
Technology | Digital marketing | Fulfilment | |||
G R O U P | ||||||
YoY | CCY | |||||
F I N | ||||||
£'m | H1 2024 | H1 2023 | Change | Change | ||
A N C | ||||||
THG Ingenuity revenue | 305.8 | 320.0 | -4.4% | -4.2% | ||
I A L | ||||||
External revenue(1) | 80.2 | 71.2 | 12.6% | 14.1% | ||
R | ||||||
E V I E | ||||||
Internal revenue(2) | 225.6 | 248.8 | -9.4% | -9.4% | ||
W | ||||||
Continuing adjusted EBITDA | 11.0 | 3.4 | 227.1% | |||
Continuing adjusted EBITDA % | 3.6% | 1.0% | 260bps | |||
Half-Year | Notes: Above numbers and table subject to rounding. [1]THG Ingenuity also comprises revenue from hosting, sustainability and media solutions. [2]Internal revenue temporarily impacted by discontinuation of non-core categories. | 9 |
Results 2024 | ||
Discontinued categories
- Further actions implemented to exit loss-making or sub-scale categories:
- Completed the sale of luxury goods portfolio to Frasers Group PLC
- Following:
- Sale of THG OnDemand and ProBikeKit in 2023 (see table - H1 2023 reported)
- Exit of small legacy brands within THG Beauty and THG Nutrition during H2 2023 (see table - H1 2023 restated)
- Ongoing portfolio management considerations to further streamline all three business to accelerate growth prospects, optimise margin, and cash generation potential
G R O U P | ||||||
H1 2023 | % | H1 2023 | ||||
F | ||||||
£'m | H1 2024 | restated | Change | reported | I N | |
A N C | ||||||
Revenue | 22.9 | 58.8 | -61.2% | 18.7 | ||
I A L | ||||||
Adjusted EBITDA | (3.5) | (4.4) | 19.9% | (3.1) | ||
R | ||||||
E V I E | ||||||
Adjusted EBITDA margin % | -15.4% | -7.5% | -790bps | -16.3% | ||
W |
Half-Year | Notes: Above numbers and table subject to rounding. The above restated numbers include additional THG Beauty & THG Nutrition divisions which have been reclassed to Discontinued. | 10 |
Results 2024 | ||