Following today’s release of THG’s figures for the quarter ending 31st December 2024; Emily Scott, retail analyst at GlobalData, a leading data and analytics company, offers her view: “THG’s Q4 FY2024 highlights a challenging picture, where performance has stagnated despite what should have been an ideal environment for growth as consumer interest in wellness and willingness to spend on beauty grew. THG Beauty saw a 1.3% decline in Q4 revenue on a reported basis. This is especially disappointing in the context of a booming beauty market and when compared to competitor Boots, whose online sales rose by an impressive 23% in constant currency in its Q1 to 30 November. THG Nutrition struggled significantly with a drop of 12.7% in Q4 sales and an 11.9% decline for the full year. THG has continued to see ongoing challenges in the nutrition sector, with sales falling 12.7%, including high commodity prices and a volatile currency environment in Asia. As a result, total group revenue was held back by the underperformance in Nutrition and the ongoing reduction in own-brand lines in its beauty business.
“THG’s underperformance in the beauty sector is especially glaring when compared to rivals like Boots and Superdrug, who have demonstrated impressive growth despite facing similar challenges, such as increased competition from Sephora and Space NK in the UK. Superdrug has outpaced many competitors by effectively leveraging its value proposition and offering a seamless omnichannel experience, seeing online growth of 21% in the six weeks to 4 January. In contrast, THG’s sales decline in beauty in Q4 showcases that it has failed to capture the same level of consumer attention that Boots and Superdrug have garnered, for instance by consistently introducing popular brands and investing in their own brands. THG could combat this by continuing to work with popular influencers such as Molly Mae, who has just re-signed a contract with the group, to tap into a customer base that is extremely receptive to upcoming trends. Growth was particularly strong in fragrance, which saw a 32% increase in order value in Q4. This was mainly due to consumers being willing to spend more on perfumes, benefitting from the group’s wide range of luxury perfumes for all fragrance types.
“THG Nutrition faced ongoing headwinds, with revenue falling by 12.7% in the quarter. This was primarily due to high levels of promotional activity to clear old stock due to Myprotein’s rebrand. The foreign exchange pressures in Asia have also created a tough trading environment. Promotional activity was reduced in the second half of the year though, so THG will hope that its global rebrand will start to pay off in 2025 – although high commodity costs continue to be a challenge. There was a bright spot in Q4 though, with THG seeing margin expansion in Beauty and its full year EBITDA is expected to be in line with the consensus range.”
