THG expects increased H1 profits following strong Q2

THG has welcomed a “strong” second quarter of trading that is set to increase its first half profitability, with adjusted EBITDA for the half-year now expected to be between £44m and £47m, compared with £32.3m in the same period last year. 

As a result, the group’s guidance for the financial year remains unchanged as disclosed in April, with its adjusted EBITDA expected to be in line with the company consensus. 

The group’s free cash flow performance for the year ended 30 June is also ahead of expectations and is anticipated to be at around £40m outflow. 

According to the retailer, it remains “well on track” to deliver free cash flow neutrality for the full year, with adjusting items materially lower than the prior year. 

This comes as the retailer’s nutrition arm has had a “particularly” strong start to the year, with the pricing decision to support consumers through exceptional market-wide inflationary conditions in FY22 now paying dividends. 

In addition, commodity prices continue to ease, with further margin benefits expected in the second half of the year.

Likewise, THG Beauty has focussed on profitable sales in markets where localised infrastructure can deliver economies of scale, and as such, the group expects further sales momentum in the second half of the year. 

THG also announced that its founder and CEO, Matthew Moulding, has transferred the special share held by him, resulting in all rights of the special share to be cancelled by the group. 

The retailer’s intention in relation to moving to a premium listing remains as stated in its FY22 results in April, with timing subject to the final outcome of the FCA’s review for reform of the listing regime.

In a separate announcement today, the board said it has also appointed Helen Jones as independent non-executive director, with Iain McDonald stepping down from the remuneration committee to focus on his sustainability and nomination committee commitments.