Saturday, May 25, 2024

THG results show beauty surge, but Ingenuity’s internal revenue drops

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Beauty and e-commerce tech giant THG’s first quarter saw sales growth accelerating from 1.1% at the end of last year to 4.5% this time. And it said it saw a “standout performance” in THG Beauty, with an 11.1% rise at constant currency, compared to just 2.6% in Q4.

THG

In total, Q1 THG Beauty revenue was £267.6 million, up 9.3% on a reported basis and rising in double digits at constant currency, as mentioned.

External revenue for THG ingenuity – the company’s service offer for other websites – rose 5.9% at constant currency and 4.1% reported to £37 million. But Ingenuity’s internal revenue was down and it meant that the total for the operation fell 4.9% at constant currency and 5.3% reported to £149.6 million.

The company said overall group sales continued to strengthen, with improvements made in each of the past five consecutive quarters.

Its strategic focus on higher-margin sales through FY23 was “rewarded, with continuing revenue growth, building on the growth achieved in Q4 2023”.

Looking more closely at THG Beauty, the impressive performance followed targeted changes to its geographic strategy through 2023, focusing on more profitable customers and territories closest to its global distribution hubs.

Positive momentum continued into Q1 with all channels in growth. THG Beauty channels are comprised of Retail (80% of revenue), own-brand (10%) and manufacturing (10%).

Performance in the UK (over half of online Beauty revenue) was notably strong, ahead of the overall Beauty business.

App participation grew to 24% of online revenue from 15% a year ago, with particularly strong participation in the UK at 35%. 

It said that “increased app revenue participation supports deeper relationships with our customers, providing valuable first party data and lessening the reliance on paid marketing channels”.

THG Beauty further increased market share in the UK total premium beauty market and further enhanced its fragrance credentials with 10 new brand launches.

Biossance was migrated onto the Ingenuity platform in January. Early signs are positive and it’s “confident that Biossance will scale to become one of our largest own brands, with prominence in the US, both online and across major retailers”.

During Q1 THG Ingenuity delivered numerous contract wins, including a partnership with fashion and lifestyle brand White Stuff on its brand relaunch into Germany. The relaunch delivered 75% year on year revenue growth.

As for the dip in THG Ingenuity internal revenue, the group implemented profitability improvement plans through 2022 and 2023, which included the discontinuation of non-profitable categories in addition to the sale of OnDemand. 

It said that as Beauty returns to growth, “internal revenue will also benefit, albeit at a slower rate than external sales, given anticipated volume of contract wins”.

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