THG reported increased operating losses after taking a £26.2 million charge reflecting the exit of loss-making discontinued categories and non-core assets.
The firm has ditched the loss-making OnDemand business, and while revenue across the business fell slightly year-on-year THG say this morning this is due to a “de-emphasis in certain beauty markets and the proactive pivoting of the THG Ingenuity strategy.”
The Manchester-based e-commerce firm said in the six months to 30 June 2023, revenue fell 9.3% to £969.3 million, from £1.07 billion the year before.
While it generated record Nutrition revenue of £340.7 million, up 2.6%, Beauty revenue fell 10.4% to £538.7 million and Ingenuity revenue slipped 14.9% to £320.0 million.
On the positive side, underlying earnings (EBITDA) from continuing operations of £50.1 million were up 22.9% from £40.8 million last year, above the top end of guidance which THG had put at £47 million to £50 million, at a margin of 5.3%, up from 4.0%.
The FTSE 250-listed firm left adjusted EBITDA guidance unchanged for the full year.
But operating losses increased to £99.5 million from £89.2 million.
Adjusted EBITDA leapt 72% in its Nutrition arm to £47.1 million but fell back in Beauty to £10.6 million from £17.7 million, impacted by one-off industry de-stocking in manufacturing.
Since the start of August, however, the Beauty division has returned to growth, the company said, with other second-half events including the acquisition of City AM newspaper for £1.5 million.
THG Ingenuity also announced new and expanded partnerships including L’Oreal Group and Asda Stores Ltd
Chief executive Matthew Moulding said: “Inflationary pressures provided significant challenges to consumers and businesses alike over the past 18 months. Our strategy of supporting our consumers through 2022, sacrificing margins in the short-term, is bearing fruit. This is reflected in the strong H1 results we’ve posted today, across adjusted EBITDA and cash.
“The cash performance of the Group has been strong in H1, but also over the last 12 months. Group cash flow performance improved by £350m compared to the previous 12 months, reflecting the completion of our global infrastructure roll-out program, with the Group now achieving significant operating leverage from a well invested, automated, global platform.”
