In its Q3 trading statement, The Hut Group (THG) reported a strong performance in its Beauty division, marking its most significant quarter of organic sales growth since 2021. The company saw overall revenue growth, driven by solid results from its Beauty and Nutrition sectors, despite challenges arising from disposals and discontinued activities. As the key holiday season approaches, THG remains optimistic about achieving strong results in the second half of the year, particularly in the Beauty sector.
Quarterly Revenue Overview:
THG’s total revenue for the three months ending in September rose by 2.4%, reaching £405.2 million. On a continuing basis, excluding revenue from discontinued operations, the company reported a more substantial increase of 6.3%. Despite a dip in total Beauty revenue by 1.2% to £258.2 million, the Beauty division demonstrated resilience with a 4.2% rise in continuing revenue, showing that the core business is on track for growth.
The revenue growth during Q3 was impacted by a series of business decisions, including the sale of THG’s luxury portfolio and the withdrawal from certain activities in Europe and Asia. These factors contributed to a reduction in year-to-date and Q3 revenue growth by 340 basis points and 270 basis points, respectively. Nonetheless, THG has adapted its strategy, focusing on its most profitable and promising areas, particularly within its Beauty division.
Beauty Division Sees Growth Amid Strategic Changes:
The performance of THG Beauty in Q3 has been a highlight for the company, especially as the beauty sector begins to enter its crucial sales period—the Golden Quarter, which includes the end-of-year holiday season. Despite the disposal of its luxury portfolio and some ongoing restructuring, the Beauty division has remained robust, with expectations that sales will rise by 1% to 3% for the second half of the year.
One key contributor to THG Beauty’s performance has been its ability to continue driving strong sales for new product launches. The company has also focused on maintaining a disciplined approach to operations and enhancing its brand proposition. As a result, THG expects its Beauty division to make a strong contribution to overall sales, with forecasts for a record Advent sales season in 2025.
Matthew Moulding, CEO of THG, emphasized that the company’s continued growth in the Beauty sector is a direct result of its strategic changes and operational improvements. “In THG Beauty, our focus on commercial discipline and elevating the brand proposition has driven a return to revenue growth, supported by a strong advent launch,” Moulding commented. “We are well-positioned for the key trading period ahead.”
The company’s commitment to driving revenue through strategic brand launches, improvements in e-commerce platforms, and expanding its international reach is paying off. As the holiday season approaches, THG anticipates an even stronger performance, as the Beauty division prepares for a bumper sales period.
US Retail Performance Shows Promise:
Another area of growth for THG in Q3 has been its performance in the US retail market. The company reported impressive results in luxury skincare and devices, with growing customer subscriptions providing a boost to order frequency and lifetime value. These developments are in line with THG’s strategy to expand its presence in the US and increase its customer base in the premium beauty segment.
In particular, the Lookfantastic brand, which is one of THG’s flagship beauty platforms, saw double-digit revenue growth in the UK. The expansion of its global retail footprint has supported this success, with THG focusing on key international markets where beauty consumption continues to rise.
Strategic Disposals and Focus on Core Areas:
While THG’s Beauty division has excelled, the company has also made significant changes to its business strategy, including the sale of its luxury portfolio. The luxury brand disposal, coupled with the strategic decision to withdraw from specific sales activities in Europe and Asia, has contributed to a reduction in total revenue. However, these actions have been part of a broader strategy to streamline operations and focus on high-growth, high-margin areas.
The sale of luxury assets and the company’s exit from certain markets are expected to have a long-term positive effect on THG’s overall profitability. As Moulding pointed out, the largest impacts from these changes have now annualized, meaning their effects on revenue growth will diminish in the future.
The Path Forward: A Strong End to 2025:
Looking ahead to the remainder of 2025, THG remains optimistic about its prospects, particularly in the Beauty division. The company has invested heavily in new product development, improved customer experiences, and expanding its digital presence. These initiatives, combined with solid momentum in key markets like the US and the UK, position THG well for a successful holiday season.
The company is also planning for a record Advent sales period, which traditionally brings a significant portion of annual revenue for many beauty and wellness brands. With a strong pipeline of new products, a revitalized brand portfolio, and a focus on e-commerce excellence, THG is set to capitalize on this peak season.
THG’s success in the Beauty sector is a clear indication that its strategic changes are beginning to bear fruit. With expectations for growth in the second half of the year, especially during the Golden Quarter, the company looks set to finish 2025 on a high note.
Conclusion:
THG’s Q3 results have showcased a promising path for the company, particularly within its Beauty division. The company’s focus on commercial discipline, new product launches, and e-commerce growth has allowed it to navigate a challenging environment and position itself for a strong end to the year. As THG prepares for a record-breaking Advent sales period, its performance in key markets like the US and UK, along with its strategic refocus, should continue to support growth into 2025 and beyond.
Leave a Reply