Beauty is driving force behind The Hut Group’s soaring success

For Q3, Matthew Mouldings’ business reported 57% growth year-on-year for its beauty division – the highest of all its categories

Group sales were up 38% for THG in Q3 2021

Beauty has become The Hut Group’s (THG) undisputed category leader, with year-on-year growth of 57% for Q3.

For the three months ended 30 September, THG Beauty, which counts Illamasqua and ESPA among its portfolio, earned £2.4bn in sales compared with £1.5bn for the same period in 2020.

Group revenues rose 38% year-on-year on a constant currency basis to £507.8m, hiking year-to-date growth for the beauty owner to 42.3%.

THG’s Ingenuity business, where the company is placing a lot of its growth strategy, also saw encouraging growth for the three month period with 44% growth year-on-year from £35m in 2020 to £51m in 2021.

The Ingenuity business is a platform that enables end-to-end digital commerce, and now counts 163 live client websites, and has its sights on achieving recurring revenue of 60% by Q4 2022.

Matthew Moulding, the Manchester-based company’s founder and Chief Executive, said that the business’ ability to integrate Cult Beauty, a pure play beauty retailer, which THG picked up for £275m in August, ahead of schedule had delivered immediate improvements for THG Ingenuity.

“The recent successful migration of Cult Beauty onto the Ingenuity platform is testament to the resilience of the infrastructure and the expertise of our digital talent,” said the billionaire businessman.

“In under ten weeks we have seamlessly migrated Cult Beauty, whilst delivering significant website and customer user-experience improvements at the same time.”

But it has not been plain sailing for the seemingly unshakeable business.

Earlier this month, THG’s share price tumbled, shaving off almost 35% of its market value, or £1.85bn, following its capital markets day – and this is not a one off for the business.

Since the group announced that it would be publicly listing its THG Beauty category in 2022, in an effort to focus more on its Ingenuity arm, investors have been pulling out thick and fast.

In a statement, it said there was “no notifiable reason” for the share price plummet and that available cash as of 30 September stands at £700m.

Moulding also gave up his ‘golden share’ in the company, saying that the decision would promote ‘good corporate governance’ and help it apply for a premium listing in London, which it hopes to achieve in 2022.

THG also brushed off any impacts of logistics, labour and product inflation throughout Q3, noting that the business’ vertically integrated business and focus on cost control has “largely” mitigated any pressures.

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