Thg Plc ((GB:THG)) has held its Q2 earnings call. Read on for the main highlights of the call.
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In the latest earnings call, THG Plc presented a balanced outlook with notable strategic achievements alongside some persistent challenges. The company highlighted positive developments such as growth in the THG Nutrition division, strengthening of the balance sheet, and successful disposals. However, it also acknowledged challenges like a decline in group revenue and high input costs in the Nutrition segment. Overall, the sentiment was balanced, reflecting both optimism and caution.
THG Nutrition Division Growth
THG Nutrition reported a 3% revenue growth, primarily driven by new customer acquisition and the expansion of offline retail in Europe, the U.S., and Asia. This growth underscores the division’s strategic focus on broadening its market reach and enhancing customer engagement.
Balance Sheet Strengthening
The company made significant strides in strengthening its financial position by reducing gross debt by GBP 374 million and extending facilities to December 2029. These efforts are moving THG towards a net cash position, highlighting its commitment to financial stability.
Strong Performance in Beauty Retail
The U.K. Beauty retail business experienced its fastest growth rate since Q1 2024, fueled by a robust U.K. market and a growing loyalty program with over 3 million members. This performance reflects the division’s successful market strategies and customer retention efforts.
Successful Disposal of Claremont Ingredients
THG successfully sold Claremont Ingredients for over GBP 100 million, marking a significant return on investment. The company retained long-term supply contracts, ensuring continued collaboration and supply chain stability.
Myprotein Brand Growth and Expansion
The Myprotein brand saw a positive response to its global rebrand, with new customer growth and product rollouts in U.S. Walmart stores. Over 200 new products were launched, showcasing the brand’s dynamic expansion and innovation.
Launch of New Brands and Partnerships
THG introduced over 70 major new brands on its platform and engaged in new licensing deals, enhancing its product offerings and market presence. These initiatives are expected to drive future growth and customer engagement.
Group Revenue Decline
The group reported a revenue of GBP 783 million, a decline of 2.6% from the previous year. This decrease was largely attributed to strategic actions within THG Beauty, including the planned discontinuation of certain operations.
High Input Costs in Nutrition
Despite strong sales growth, high input costs in the Nutrition segment impacted margin performance during the first half of the year. This challenge underscores the need for cost management strategies to protect profitability.
Impact of Strategic Changes on Beauty Revenue
The majority of the revenue decline in the Beauty division was due to planned discontinuation of certain operations and sales activity withdrawal in Europe and Asia. These strategic changes were aimed at optimizing the division’s focus and resources.
Timing of Large Orders Affecting Beauty Own Brands
The timing of large orders into major customers fell later in the year, impacting the profitability of the Perricone MD brand in the first half. This timing issue highlights the challenges of managing supply chain and customer demand dynamics.
Forward-Looking Guidance
Looking ahead, THG remains confident in its full-year guidance, supported by positive growth in both the Beauty and Nutrition divisions. The company is focused on strategic actions to enhance market share and customer loyalty. Additionally, THG is exploring growth opportunities in retail media and licensing to expand its global brand presence.
In summary, THG Plc’s earnings call revealed a company navigating both opportunities and challenges. The overall sentiment was balanced, with strategic achievements in Nutrition and Beauty offset by revenue declines and cost pressures. Investors will be keenly watching THG’s strategic moves and market developments as the company aims to strengthen its position in the global market.