Online & Digital

THG rebuffs ‘unacceptable’ takeover proposals as revenues hit £2.2bn

The group’s sales grew 95.1% across all business units on a two-year basis, and profits increased 33.6% to £974.8m despite the ongoing global supply chain challenges, commodity and FX headwinds

The Hut Group (THG) has recorded “record” revenue growth of 38.1% year-on-year from £1.6bn to £2.2bn in the full year ended 31 December 2021 (FY21), driven by organic growth in all divisions and supplemented by the contribution from acquired businesses.

According to its latest trading update, The Hut Group has received takeover proposals from numerous parties in recent weeks, but the board said that every proposal has been “unacceptable” and fails to reflect the “fair value” of the group.

The announcement comes as the group’s sales grew 95.1% across all business units on a two-year basis. International sales represented 58% of revenues, with the USA now representing 19% of group sales.

Additionally, profits increased 33.6% to £974.8m despite the ongoing global supply chain challenges, commodity and FX headwinds.

Overall, THG Beauty delivered 51.8% sales growth, and two-year growth of 138.1%, including a contribution from Dermstore, Bentley Laboratories, and Cult Beauty. THG Beauty witnessed “significant growth” over the year with global active customers rising by 2.3 million to 9.2 million, and the group’s number of third-party websites has almost doubled in FY21.

Meanwhile, THG incurred an operating loss of £137.5m, impacted by £43m of non-recurring distribution costs, £33.2m of administrative costs, and a £53m non-cash cost in respect of impairment within THG Experience, THG Luxury and THG OnDemand divisions.

The group also recorded adjusted EBITDA of £161.3m at a margin of 7.4%, which THG said reflects FX movements, company investment in talent and infrastructure, increasing raw material costs, and freight costs which saw a marked acceleration in H2 2021.

The company said it intends to limit the impact of cost pressures on consumers amid the rising inflation by maximising efficiencies in its operating model, absorbing some pricing pressures, and raising prices at a lower rate to underlying input costs.

THG has also appointed Lord Charles Allen as independent non-executive chair to help the group continue to drive profitable and sustainable growth.

Matthew Moulding, CEO of THG, said: “In our first full year as a public company, 2021 saw us scale revenue and expand our business model, well ahead of targets set at IPO. We delivered a record revenue performance for the year.

“There has been significant speculation about possible third party interest in THG. I can confirm that the board has received indicative proposals from numerous parties in recent weeks. The board has concluded that each and every proposal to date has been unacceptable, failing to reflect the fair value of the group, and confirms that THG is not currently in receipt of any approaches.”

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