REG - Huddled Group PLC - Trading Update

HuddledAnnouncement

13/01/2025 07:00

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RNS Number : 0523T  Huddled Group PLC  13 January 2025

The information contained within this announcement is deemed by the Company to
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time.

 

Huddled Group plc

 

("Huddled", the "Company" or the "Group")

 

 

Trading Update

 

Huddled Group plc (AIM:HUD), the circular economy e-commerce group, is pleased
to provide an unaudited update on Q4 2024 and FY 2024 trading.

 

Highlights

 

FY 2024 highlights:

 

 ·         Group revenue in excess of £14m for FY 2024, a circa 485% increase compared
           to FY 2023(1), exceeding our expectations across all of our core brands
 ·         Record quarterly Group revenue in Q4 2024 of approximately £5.4m, circa 50%
           increase on Q3 2024
 ·         FY 2024 Discount Dragon revenue of around £10.8m, an increase of circa 112%
           versus FY 2023(2)
 ·         Discount Dragon delivers a modest adjusted EBITDA profit for the first time in
           the month of October 2024
 ·         Q4 2024 Nutricircle revenue of circa £0.7m, an increase of circa 130% versus
           Q4 2023(2), and an increase of approximately 28% on Q3 2024
 ·         Boop Beauty delivered revenue of circa £0.5m in Q4 2024, following its
           relaunch in September 2024
 ·         Cash in excess of £1.6m as at 31 December 2024, in line with our expectations
 ·         Net cash inflow of £0.4m expected to be received by the Company from the
           Let's Explore joint venture in Q1 2025

 

Summary

 

2024 has been a year of growth across all of our brands, with total Group
revenue exceeding £14m. We believe our strategy to reduce waste by acquiring
surplus inventory whilst, at the same time, passing savings to customers is
resonating across our supply chain and customer base.

 

The amount of surplus stock, whether it be food or cosmetics, vitamins or
perfumes, continues to be a global problem. With manufacturers and retailers
coming under increasing pressure from both customers and legislation, we
believe that Huddled is well placed to reduce the quantum of these products to
going to waste and to deliver value to its growing customer base in the
process.

 

Q4 2024 was a record quarter for the Group, with revenue of circa £5.4m.
Nutricircle and Boop exceeded our expectations, which, along with growing
revenue at Discount Dragon, put pressure on our warehouse.

 

In Q4 2024 our warehouse in Leigh fulfilled over 110,000 orders, an increase
of circa 27% compared to Q3 2024, approaching the limit of orders that can be
handled.

 

As a direct result, in mid-November, pending the redesign of our current
warehouse floor and the addition of the new floor in Q1 2025, we took the
decision to reduce the stock levels and proactively dispose of legacy and
slow-moving stock. This reduction in stock, whilst impacting profitability in
the final two months of the year, will allow the smooth transition to a new
warehouse operating environment, which we believe will, in time, significantly
reduce the cost per pick and, therefore, our overall fulfilment costs.

 

We used this stock as an opportunity to offer free gifts and reduced-price
offers via a range of marketing-led sales promotions to attract new customers.
The total number of new customers across our three core brands in Q4 2024 was
38.5K, an increase of 61% compared to Q3 2024.

 

In October 2024, our partner in the Let's Explore business, Wicked Vision
Limited, went into administration. Whilst the financial impact was negligible,
it resulted in Huddled's management having to step in and reassume day-to-day
running of the business to ensure everything was in place for the division's
peak trading period. Despite this challenge, we are pleased to report that the
majority of the stock on hand was sold in Q4 2024, generating sales of circa
£1.1m. Huddled expects to receive a net cash inflow of £0.4m from the Let's
Explore joint venture during the course of Q1 2025, during which time we will
assess our future strategy for this business.

 

The adjusted EBITDA loss is expected to be narrower in the second half of the
year compared with the first half. The FY 2024 loss is in line with our
expectations and reflects the fully expensed acquisition of over 100,000
customers in the year and scaling-up of warehouse capacity.

 

We ended 2024 with cash on hand of £1.6m. The directors remain confident that
the Group has sufficient resources to take the business into profitability.

 

 

Divisional Update

 

Discount Dragon

 

Discount Dragon has continued its growth trajectory despite the limitations on
the warehouse in the final quarter. Over 285K orders were placed in the year,
up 70% on 2023, delivering revenues of circa £10.8m, an increase of 112%
compared to 2023(2). Returning customers accounted for 73% of all orders.
Average Order Value ("AOV") has increased circa 33% year-on-year(2), ending
the year at circa £40.

 

Q4 revenue was circa £3.1m, an increase of circa 74% on the same period in
2023(2), and an increase of circa 9% versus Q3 2024. During the period we
welcomed 18.8K new customers.

 

With over 76K orders in the final quarter of 2024, the brand was, alongside
Nutricircle and Boop running at above maximum capacity in terms of fulfilment.

 

We were pleased to see Discount Dragon deliver a modest adjusted EBITDA profit
for the first time in the month of October 2024, underpinning the Company's
belief in its strategy and business model.

 

 

Nutricircle

 

With revenue of circa £0.7m, and 22.4K orders in the final quarter of 2024,
Nutricircle delivered its best quarterly performance to date, exceeding our
expectations.

 

With solid Q3 growth the decision was taken to scale the business in Q4. As a
result, the number of new customers added in Q4 2024 was 10.4K, circa 67% more
than were added in Q3 2024, driving sales to record levels, with revenue
increasing by circa 28% against Q3 2024. The investment in new customer
acquisition has already started to pay dividends, with the brand reporting
further revenue growth in early January 2025 trading.

 

AOV for the post-acquisition period averaged circa £34, slightly lower than
historic levels due to the prevalence of new customer orders, which tend to be
smaller than returning customer orders. Work is underway to introduce a wider
product range, including vitamins and supplements, in order to drive up AOV.

 

New TV and radio adverts have been produced for Nutricircle which are due to
be aired in mid-January 2025 to coincide with the seasonal increase in gym
attendance and other fitness activities. The brand launched on TikTok, and
TikTok live in early January 2025.

 

 

Boop Beauty

 

We were delighted to see Boop Beauty deliver revenue of circa £0.5m in its
first quarter of trading in Q4 2024. 12.5K orders were placed and 9.3K new
customers were welcomed in the period. AOV on this brand has started strongly,
averaging circa £37.

 

The focus on the reduction of surplus cosmetics going to waste has struck a
chord with customers and manufacturers alike, allowing the Group to quickly
establish itself as a serious player in the cosmetics sector.

 

Whilst the business is still in its infancy, with investment, we can see a
pathway to profitability in 2025.

 

The current focus is on building new customer numbers at scale.   To this
end, TV and radio adverts have been produced, as well as investments made in
TikTok affiliates and TikTok live airings.

 

In December 2024, the remaining 25% of the business was acquired, giving
Huddled 100% ownership of the brand. This will enable the Company to maximise
any returns on its investment in the brand, a brand we think has the potential
to become a valuable asset to the Group.

 

 

Martin Higginson, Chief Executive Officer of Huddled commented:

 

"2024 was an incredible year. We more-than-doubled the revenue of Discount
Dragon, acquired two new brands in Nutricircle and Boop Beauty, processed over
346K orders, and welcomed over 100K new customers.

 

"As we move into 2025, we will start to see the benefits of the additional
warehouse space and efficiencies. In addition, the growth in orders, and
revenue, will bring further savings from packaging, carriers and payment
processing, helping to drive better margins across the Group.

 

"Turning surplus stock into savings for our customers is constantly at the
forefront of our minds. As we continue to grow and get our message out there,
we are able to deal with more manufacturers and retailers directly, helping
them solve a surplus issue as well as driving more value for our growing
customer base, who have rated each of our brands as 'Excellent' on TrustPilot.

 

"Whilst there is still much to do, we are confident we now have the
foundations for success in place. I would like to thank the entire Huddled
team for their continued efforts and hard work, the talent we have is
incredible."

 

(1) FY 2023 comprised the Let's Explore division for the full year and
Discount Dragon from 16 October 2023.

(2) Like-for-like comparison including pre-acquisition revenue.

 

Enquiries:

 

For further information please visit www.huddled.com/investors, or contact:

 

 Huddled Group plc                                                         investors@huddled.com

 Martin Higginson

 Daniel Wortley

 Zeus (Nominated Adviser and Sole Broker                                   Tel + 44 (0) 203 829 5000

 Nick Cowles, James Hornigold, Alex Campbell-Harris (Investment Banking)

 Dominic King (Corporate Broking)

 Alma Strategic Communications (Financial PR)                              huddled@almastrategic.com

 Rebecca Sanders-Hewett

 Sam Modlin

 
 

 

 

 

 

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