REG - THG PLC - Q4 Trading Statement

THGAnnouncement

18/01/2022 07:05

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RNS Number : 7443Y  THG PLC  18 January 2022

18 January 2022

 

THG PLC

 

Fourth quarter trading statement for the period ended 31 December 2021

 

 

Q4 2021 Group revenue of £711.7m, +29.7%(1) YoY and +95.7% 2 year growth

 

FY 2021 revenue of £2.2bn, +37.9%(1) YoY and +95.0% 2 year growth

 

Strong revenue growth expected for FY 2022; +22.0% to +25.0% YoY, including
£108.0m - £112.0m for Ingenuity Commerce

 

 

 

THG PLC ("THG" or the "Group"), the global proprietary technology platform
specialising in taking brands direct to consumers ("D2C"), announces a trading
update for the period ended 31 December 2021 ("Fourth Quarter" or "Q4 2021").

 

Q4 & FY 2021 Group Trading Performance

 

 £m                             Q4 2021  Q4 2020  YoY(2)   YoY      2 Year   2 Year

                                                  Growth   Growth   Growth   Growth

                                                           CCY               CCY

 THG Beauty                     407.9    298.5    36.7%    38.9%    127.4%   130.4%
 THG Nutrition                  171.8    158.9    8.1%     12.1%    51.6%    55.6%
 THG OnDemand                   46.5     41.9     10.9%    13.1%    101.1%   101.7%
 THG Ingenuity                  57.4     40.5     41.8%    42.7%    65.4%    70.7%
 Other                          28.0     20.0     39.7%    37.6%    44.6%    42.1%
 Group Revenue                  711.7    559.8    27.1%    29.7%    92.4%    95.7%

 Ingenuity Commerce Revenue     15.4     7.3      111.1%   111.1%   415.0%   415.0%
 Annual Revenue Run-Rate (ARR)  61

 £m                             FY 2021  FY 2020  YoY      YoY      2 Year   2 Year

                                                  Growth   Growth   Growth   Growth

                                                           CCY               CCY

 THG Beauty                     1,116.3  751.6    48.5%    51.4%    133.4%   137.8%
 THG Nutrition                  659.5    562.3    17.3%    20.8%    59.7%    63.3%
 THG OnDemand                   128.1    101.3    26.5%    29.4%    119.3%   122.1%
 THG Ingenuity                  194.3    137.3    41.4%    43.4%    51.8%    56.5%
 Other                          80.2     61.1     31.3%    28.0%    28.0%    25.5%
 Group Revenue                  2,178.3  1,613.6  35.0%    37.9%    91.1%    95.0%

 Ingenuity Commerce Revenue     45.4     19.3     135.2%   135.2%   512.3%   512.3%

 

(1) Any reference to revenue growth throughout this document is on a constant
currency basis (“CCY”). Removing fluctuations arising from translation of
foreign exchange by restating prior year numbers at current year exchange
rates.

(2 )YoY defined as year-on-year statutory sales growth.

 

 

Matthew Moulding, CEO commented:

"We are delighted to report significant growth across all divisions during the
peak Q4 trading period and to have delivered record annual sales of
£2.2billion.

 

"The operational resilience and performance of our Ingenuity infrastructure
was a highlight, dispatching over one million units per day at peak periods.
The investment we have made in automation in the UK delivered year-on-year
efficiencies, and we are on track to launch our first AutoStore facility in
the US during Q2 2022, supplementing the six warehouses added to the network
across three continents during 2021.

 

"2021 marked our first full year as a public company and I would like to
express my gratitude to all THG colleagues for their dedication and hard work
in helping us achieve such a strong performance for the year. Despite
challenging conditions, we have scaled revenue and expanded our business
model, particularly THG Ingenuity, well ahead of expectations given at our IPO
16 months ago. At the same time, we welcomed c.3,000 new employees across the
world to the Group, the majority of whom are within the U.K., and completed
many transformational projects, including the opening of our 1m sq. ft. U.K.
technology campus, ICON.

 

"During the year, the Group also invested around one billion pounds across
infrastructure, technology and M&A to further develop the long-term growth
prospects of our key trading divisions. We remain committed to our strategy of
investing for growth across our global fulfilment network and technology
platform.

 

"The new year has started well, and we remain confident in delivering our
strategic growth plans during 2022 and beyond."

 

 

Outlook and guidance

Momentum coming into 2022 remains strong across the Group following an
acceleration in organic revenue growth in Q4 vs. Q3 2021 and with a
substantial pipeline of site launches within THG Ingenuity. While the early
part of 2022 is expected to be a more challenging comparable period due to
global lockdowns in H1 2021, and record commodity prices within our Nutrition
division, the Board expects FY 2022 revenue growth of +22.0% to +25.0% (CCY).

 

FY 2021 adjusted EBITDA margin is expected to be in the range of 7.4% to 7.7%,
compared to market expectations of c.7.9%, after taking into account c.90bps
of adverse foreign currency movements.

 

For FY 2022, the Group expects adjusted EBITDA margins to improve throughout
the year as we see the benefits of 2021 investments in automation offsetting
inflationary pressures, in addition to the increasing mix of revenues
generated from Ingenuity Commerce. The phasing is expected to be weighted to
the second half of the year, given movements in raw material prices, transport
costs and currencies.

 

Q4 & FY 2021 highlights

·     Q4 2021 revenue growth of +29.7%, with accelerated momentum in
organic sales during peak underpinning a full year revenue increase of +37.9%.

·     THG Beauty delivered sales growth of +38.9%, with six orders per
second placed during the peak cyber period. Post platform migration,
meaningful customer service improvements were realised including a 0.8 day
average reduction in delivery service in the US for Dermstore, and an extended
seven hour next day delivery cut-off time for Cult Beauty UK customers due to
THG Ingenuity's expansive courier relationships.

·     THG Nutrition delivered revenue of £171.8m, +12.1% YoY, with FY
2021 sales +20.8% vs FY 2020. Growth was broad based with the UK and US
delivering growth of +70% on a 2 year basis, with a call out performance in
Japan for Singles Day.

·   Enhanced consumer order value and frequency metrics across app users
with 6.8m app downloads since 2020 launch (FY 2021: 4.2m), now accounting for
c.7% of D2C Group sales(3).

·   Influencers continued to play an important role in marketing,
generating c.23% of Nutrition Cyber month sales (November 2021) and c.11% of
total Group D2C revenue for FY 2021 on a tracked(4) basis (vs 9% in FY 2020).

·    Demand in our large consumer and technology markets remains strong
and we continue to win customers at expected levels, with +89% growth in new
D2C customers to the Group in 2021 vs. 2019. New and existing customer
behaviour metrics remain consistent with the pre-pandemic environment;
notably, revenue from returning Lookfantastic and Myprotein customers
represented c.80% of sales in FY 2021, with stable average order values.

·     Total cash of over £530m at year end plus an undrawn facility of
£170m, on long dated 3-5 year terms.

 

Ingenuity Commerce update

·     FY 2021 revenue growth of 135.2% to £45.4m, with material new
client wins in late Q4 contributing from Q1 2022 onwards, supporting our
re-iteration of FY 2022 revenue guidance of £108.0m - £112.0m.

·     Site number growth during the year was driven by enterprise-scale
corporates across a diverse range of categories with over 75% of live sites in
major international territories (UK, US, France, Germany, China, Japan and
Australia).

·    Average recurring revenue per website in Q4 2021 increased to £0.24m
reflecting the increase in Gross Merchandise Value processed during the peak
quarter.

 

(3) Excluding Dermstore and Cult Beauty.

(4  )Tracked is based on revenues via link last click attribution and codes
which may have a last click attribution of other digital channels.

 

 

                                                  Q4     Q3     Q2

                                                  2021   2021   2021
 Number of live client websites(5)                187    163    133
 Average recurring revenue per website(6) (£m)    0.24   0.17   0.17
 Recurring Revenue %(7)                           72%    59%    55%
 Annual Revenue Run-Rate(8) (£m)                  61     44     37

 

(5) Number of websites defined as website with a specific domain name/URL
live at the end of the period.

(6) Average recurring revenue per website is presented on an annual basis.

(7 )Based on total Ingenuity Commerce revenue.

(8 )Annual Revenue Run-rate is based on annualised recurring revenue and
trailing 12 months non-recurring revenue.

 

 

 

Analyst and investor conference call

 

THG will today host a conference call and webcast for analysts and investors
at 9.00am (UK time) via the following links:

 

To register for the webcast, please use the below link:

https://brrmedia.news/THG_Q421 (https://brrmedia.news/THG_Q421)

 

To ask questions, you must dial in via conference line using the below
details:

·      Room number: 7571352

·      UK dial in: +44 (0)330 336 9601

 

 

For further information please contact:

 

 Investor enquiries:
 Kate Grimoldby, Head of Investor Relations    Investor.Relations@thg.com (mailto:Investor.Relations@thg.com)

 Media enquiries:
 Powerscourt - Financial PR adviser            Tel: +44 (0) 20 7250 1446
 Victoria Palmer-Moore/Nick Dibden/Nick Hayns  thg@powerscourt-group.com (mailto:thg@powerscourt-group.com)

 THG PLC

 Viki Tahmasebi                                Viki.tahmasebi@thg.com (mailto:Viki.tahmasebi@thg.com)

ENDS

Notes to editors

THG (www.thg.com) is a vertically integrated, global, digital-first consumer
brands group, retailing its own beauty and nutrition brands, plus leading
third-party brands, via its proprietary, end-to-end, e-commerce technology,
infrastructure and brand-building platform (THG Ingenuity). THG's business is
operated through the following businesses:

THG Ingenuity: Ingenuity Commerce provides end-to-end technology services
charged to third party clients for digital commerce solutions. Ingenuity
Infrastructure underpins the Ingenuity Commerce offering, and is charged to
third parties as a single stand-alone service. Services include hosting,
content creation through THG Studios, translation services and beauty product
development and manufacturing.

THG Beauty: The globally pre-eminent digital-first brand owner, retailer and
manufacturer in the prestige beauty market, combining its portfolio
of eight owned brands across skincare, haircare and cosmetics, the provision
of a global route to market for over 1,000 third-party beauty brands through
its portfolio of websites, including Lookfantastic, Dermstore, Cult Beauty and
Mankind and the beauty subscription box brand GLOSSYBOX.

 

THG Nutrition: A group of digital-first Nutrition brands, which includes the
world's largest online sports nutrition brand Myprotein, and its family of
brands (Myvegan, Myvitamins, MP Clothing and Myprotein Pro), with a
vertically integrated business model, supported by six THG production
facilities.

 

THG OnDemand: Personalisation and customisation services to major brands and
global publishing houses, typically under licensing agreements, enabling
brands to offer unique products to consumers through websites including Zavvi,
IWOOT and Pop in a Box.

Other: Luxury D2C websites including Coggles, AllSole and MyBag, as well as
THG Experience, which comprises prestige locations at Hale Country Club &
Spa, King Street Townhouse Hotel and Great John Street Hotel, providing deeply
experiential brand building environments, most notably in support of THG
Society, the Group's proprietary influencer marketing platform.

 

 

Cautionary Statement

This announcement may include "forward-looking statements" in respect of the
Group's operations, performance, prospects and/or financial condition.
Forward-looking statements are sometimes, but not always, identified by their
use of a date in the future or such words and words of similar meaning as
"anticipates", "aims", "due", "could", "may", "will", "should", "expects",
"believes", "intends", "plans", "potential", "targets", "goal" or "estimates".
By their nature, forward-looking statements involve a number of risks,
uncertainties and assumptions and actual results or events may differ
materially from those expressed or implied by those statements. Factors which
may cause future outcomes to differ from those foreseen in forward-looking
statements include, but are not limited to, those identified in the "Risk
Management" section of the Group's 2020 Annual Report. Accordingly, no
assurance can be given that any particular expectation will be met and
reliance should not be placed on any forward-looking statement. Additionally,
forward looking statements regarding past trends or activities should not be
taken as a representation that such trends or activities will continue in the
future.

Except as required by any law or regulation, no responsibility or obligation
is accepted to update or revise any forward-looking statement resulting from
new information, future events or otherwise. Past performance cannot be relied
upon as a guide to future performance and persons needing advice should
consult an independent financial adviser. Nothing in this announcement should
be construed as a profit forecast.

This announcement does not constitute or form part of any offer or invitation
to sell, or any solicitation of any offer to purchase any shares or other
securities in the Group nor shall it or any part of it or the fact of its
distribution form the basis of, or be relied on in connection with, any
contract or commitment or investment decisions relating thereto, nor does it
constitute a recommendation regarding the shares or other securities of the
Group. Statements in this announcement reflect the knowledge and information
available at the time of its preparation.

 

 

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