Following the release of THG’s figures for the three months ending 30th September 2024; Tash Van Boxel, retail analyst at GlobalData, a leading data and analytics company, offers her view: “Despite group revenue edging into positive territory in its H1 2024 trading update, THG’s performance declined in Q3 as revenue fell 2.0% to £433.1m. Despite THG beauty growing every quarter, up 2.3% to £254.7m in Q3, its nutrition arm has continued its downward trajectory, offsetting beauty’s success as it witnessed a double-digit decline of 13.1% to £134.5m. However, going into the golden quarter, THG should see improvements as it leans on the popularity of beauty during Black Friday and Christmas to buoy sales in Q4. The demerger of its ingenuity arm, which it has continued to raise equity for, is aimed at simplifying the THG business model and enabling this part of the business to grow under leadership more focused on ecommerce services. When this demerger does take place, THG must refocus on its nutrition arm by entering into more partnerships with high street favourites (such as its Müller collaboration) and expanding its presence in physical stores, as without investment in its nutrition offer, this division will continue to pull down revenue.
“THG Beauty has managed to take advantage of the sustained demand for beauty across its territories, with its UK business, which accounts for half of beauty revenue, pulling up total beauty revenue as it grew its active customer base by 5% this quarter. Indeed, THG should benefit from the robust demand for the sector as we forecast the UK health & beauty market to grow 5.6% in 2024, with an impressive 10.0% growth in the online channel, according to GlobalData. As we enter the golden quarter, THG’s beauty revenue should grow further. This projected result will be driven by consumers tempted by Black Friday promotions and seeking beauty advent calendars and gifts for loved ones for Christmas. Though much of its beauty sales come from its online business, THG has ventured into the omnichannel market as it opened its first LookFantastic flagship store in Altrincham, Greater Manchester in June 2024. Creating a physical presence is a step in the right direction for THG Beauty, enabling it to withstand fluctuations in channel performance. However, its store is located in a small town in the north of England, meaning that the impact of this opening will be small. THG must expand to supermalls if it hopes to compete with the likes of Boots and Sephora, as it can more easily rent a smaller space in an area of high footfall to grow consumer exposure and enable it to rival the multichannel beauty giants.
“THG Nutrition has failed to improve this quarter, as its revenue continued to decline throughout 2024, with the 13.1% decline of Q3 2024 up against weak comparative figures in the previous year (down 3.8%). While some of this decline comes from the lasting impact of the MyProtein rebrand, THG’s continued weaker performance in Asia (which failed to achieve online growth in the quarter) also hurt the bottom line. However, despite the dismal performance of this fascia in Q3, sales have slowly been improving throughout the last three months, with September being its best-performing month. THG Nutrition has performed better offline, with 17% revenue growth in this channel. However, this accounts for under 25% of total brand sales, meaning that weaker online sales will continue to pull down total performance. Licensing partnerships will continue to be a lifeline for THG nutrition, as working alongside brands such as Müller enables it to capture more of the food & grocery market beyond those looking for macro-friendly ready meals in the form of MyProtein. THG must focus on expanding its supermarket presence, and its new ready-to-drink product may enable it to do so, with this product set to launch in October 2024. Given the popularity of Huel, THG’s version of the complete nutrition drink is likely to support sales as it appeals to consumers looking for convenient and quick ways to eat and drink on the go.”
