THG returns to growth in Q4

E-commerce retailer THG returned to growth in Q4 as revenues rose in the final quarter of the year and H2 underlying earnings margins improved.

THG said on Tuesday that revenues were up 1.1% at £597.9m in Q4, its best quarterly performance of the year, driven by "pleasing" cyber trading and "an excellent operational performance". Its performance in the UK was said to be "especially strong", delivering around 9% revenue growth in Q4.

The London-listed firm also said Q4 was "another quarter of positive cash performance", supporting free cash flow breakeven for the year, which was delivered alongside roughly £125.0m of capex investments.

A combination of gross margin improvements, a return to growth in beauty manufacturing, and "significant cost savings" from automation, resulted in a "much-improved" H2 EBITDA margin performance.

THG also announces an agreement in principle to partner with retailer Holland & Barrett to provide direct-to-consumer operational service. The partnership will add roughly £175.0m of incremental GMV to its ingenuity operations and technology platform during 2024.

Chief executive Matthew Moulding said: "2023 was a year that threw up many challenges for all businesses, and I'm delighted in how the group not only responded to these challenges, but grew stronger through the year.

"A combination of automation and significant cost initiatives delivered in 2022, in addition to a receding inflationary environment, each played a key role in the Group delivering an expected record EBITDA performance after cash-adjusting items during 2023. This strong EBITDA profitability and efficient stock management generated positive operating cashflow of circa £170.0m."

As of 0910 GMT, THG shares were up 6.87% at 71.77p.

Reporting by Iain Gilbert at Sharecast.com