Shares in THG dropped after its half-year results fell below analyst expectations, while also revealing an update on plans to demerge its technology arm Ingenuity.
The British group, which owns online beauty retailers Lookfantastic and Cult Beauty, released its half-year 2024 results alongside a separate update on its plans to sell off its digital logistics business.
THG’s plan to demerge its technology arm and switch the listing of its beauty and nutrition business to the equity shares (commercial companies) category would allow the group to be considered for inclusion in the FTSE UK Index Series.
However, the company’s softer than expected growth in half-year 2024 initially took the shine off plans to split the e-commerce giant into two separate companies.
Shares of THG closed down at a 10% decrease on 17 September on the back of the news.
THG saw its profits increase 1.6% for the half-year ended 30 June 2024, but sales were down 1.7% for the period.
Sales in THG’s beauty division soared 5.7% to £531m during this period, and its adjusted EBITDA hit £32.6m
THG’s beauty portfolio contains make-up company Illamasqua, spa brand Espa and skin care range Perricone MD, alongside Lookfantastic and Cult Beauty.
Ingenuity sales, meanwhile, surged 12.6% to £80.2m and its adjusted EBITDA hit £11m.
These positive results helped “to offset transitory headwinds” in THG’s nutrition business, where sales dropped -10.9% to £299.9m.
The Manchester-based group’s nutrition division includes protein powder brand Myprotein.
"The group continued to deliver against its strategic priorities through H1, with the performances of both beauty and ingenuity particularly strong,” said THG CEO Matthew Moulding.
“Reporting another six-month period of continuing sales and adjusted EBITDA growth was especially pleasing given the FX headwinds suffered within our nutrition business, which negatively impacted H1 profitability by a further c.£5m.
“Local manufacturing and fulfilment is now live in Japan, which will steadily scale to reduce exposure.”
THG said the second half of the year remains the group’s “most profitable and cash generative period”, in a company statement.
In its outlook, THG said revenue growth and seasonal weighting in beauty and Ingenuity during this period will be “expected to largely mitigate the nutrition [division’s] year-on-year decline”.
THG is planning to further accelerate its presence in the beauty market with the launch of Lookfantastic’s debut retail store this month.
It has also cut 171 jobs as part of the company’s ongoing cost-saving review to make the group more profitable.