THG shares sank by 12% in early trading this morning after the British retailer and brand owner posted lowered half-year results for 2023.
Revenues declined by 9.3% to £969.3m for the six months ended 30 June 2023, attributed to “significant” inflationary pressures over the past 18 months.
Losses increased to £99.5m, impacted by a one-off charge related to discontinued categories.
The Lookfantastic owner’s beauty division also dragged down results during the first half of the year, with sales falling by 10.4%.
THG said beauty sales were held back in H1 by short-term global destocking impacting manufacturing volumes.
It added that the category was also affected by a company’s “de-emphasis in certain beauty markets and the proactive pivoting of the THG Ingenuity strategy”.
However, THG said the situation has now started to reverse with the division returning to growth in August 2023.
"Recent progress within our Beauty division has been more encouraging, underpinned by strong performances in the group's Perricone MD and Espa brands, as well as across Cult Beauty,” said Matthew Moulding, THG CEO.
“Margin improvements have steadily built through H1, as focus shifted to orders that deliver immediate profitability, where we benefit from the economies of scale associated with our local distribution hubs.”
Despite anticipating an improved second half to the year, THG has adjusted its full-year guidance to come in flat or fall by up to 5% in 2023.
The company said for 2024, operational leverage, incremental cost efficiencies and commodity price improvements will support further margin recovery.
"The cash performance of the group has been strong in H1, but also over the last 12 months," added Moulding.
“Group cash flow performance improved by £350m compared to the previous 12 months, reflecting the completion of our global infrastructure roll-out program, with the group now achieving significant operating leverage from a well invested, automated, global platform.”
Moulding purchased London-based finance newspaper City AM in June this year.
The British businessman acquired the company through a pre-pack administration process for an undisclosed sum.
City AM, which was loss-making prior to its acquisition, was put up for sale in July 2023 by its owners seeking either investment or disposal - but failed to find a buyer.
Moulding also recently found himself at the centre of a spat with US hedge fund Quintessential Capital Management (QCM).
It is not the first time that Moulding has publicly expressed his frustrations with the press, hedge funds and bank analysts.
In April, Matthew Moulding hit back on social media about the UK media’s coverage of the beauty company, in the wake of a takeover proposal from US buyout firm Apollo.
A LinkedIn post by Moulding targeted the British, which he said “regularly build negative coverage” against UK listed companies.