Following today’s release of THG’s figures for the three months ending 30th September 2023; Sophie Mitchell, Retail Analyst at GlobalData, a leading data and analytics company, offers her view: “THG remains in the red zone, with group revenue declining 4.4% year-on-year in its Q3 FY2023 despite witnessing its best quarterly revenue performance in the last year. However, its performance in Q3 cannot be overstated due to the bleak results it has produced for its previous three quarters with group revenue down 9.3% for its H1, and the group having omitted its Q4 results from its FY2022 trading update. The slight recovery it has witnessed due to an improved performance across its beauty and nutrition propositions has not been enough to change its full year revenue guidance of flat sales to a 5% decline, which already factors in what the group hopes will be a successful Q4 due to the lucrative nature of the period for the beauty industry as consumer confidence improves.
“Since its success during the pandemic, THG’s beauty division has continued to lag significantly behind UK market leader Boots, whose beauty performance has gone from strength to strength, having reported a 20% increase in premium beauty sales and skincare sales up 25% for its Q4 FY2022/23 ending 31 August. Boots has also improved its online performance, as its share of online sales increased 2ppts year-on-year in its Q4 (although this is still low at 13%), rubbing salt further into THG’s wound, as the online pureplay continues to struggle.
“The strength of Boots’ loyalty scheme continues to propel its performance, with the number of active Advantage Card users at a three-year high in its Q3 2022/23 as consumers take advantage of its discounts and ability to collect points across its lower-priced and premium products. Despite offering frequent discounts, Lookfantastic does not have a loyalty scheme. Boots can win customers over from Lookfantastic when consumers want to purchase everyday and pharmacy items, helping them build up points and discounts to aid spending on the more premium brands Boots sells. Additionally, CultBeauty is lagging behind the likes of Sephora and SpaceNK in terms of the ‘cult’ and unique brands it has available, for instance, Rose Inc. has arrived on CultBeauty today (17 October 2023), despite having been a popular brand at SpaceNK for over a year. To live up to its namesake, CultBeauty must keep up with bringing on new brands to better compete with Sephora and SpaceNK.
“THG nutrition continues to be the strongest division within the group, producing its best Q3 profit performance, with the rebrand launch and pricing strategy starting to reap rewards. The success of its nutrition arm, with its year-to-date sales up 0.2% versus an 8.5% decline in the beauty division, has led the group to announce that it is exploring the prospect of listing MyProtein in the US, indicating its confidence in its nutrition proposition.”
