The Big Picture: THG Streamlines & Strengthens
Let’s cut through the noise. THG’s FY 2024 results aren’t just a financial snapshot – they’re a blueprint for a leaner, more focused business. The headline? A strategic demerger of THG Ingenuity, completed in January 2025, which allows the group to double down on its core cash-generative engines: THG Beauty and THG Nutrition. This isn’t corporate reshuffling for the sake of it – it’s a calculated move to simplify operations, reduce debt, and sharpen competitive edges.
By the Numbers: Resilience Amid Restructuring
Despite macroeconomic headwinds, THG delivered:
- £1.88bn pre-demerger revenue (+1.1% YoY in constant currency)
- £123.1m pre-demerger adjusted EBITDA (margin +10bps to 6.5%)
- Net debt reduced to £215.3m (from £218.2m in 2023)
The real story? THG Beauty’s 310bps EBITDA margin jump to 7.2%, smashing medium-term targets. Meanwhile, Nutrition took punches from record whey prices but showed green shoots in Q1 2025.
The Ingenuity Exit: Less Baggage, More Focus
Spinning off the tech division wasn’t just about balance sheet hygiene – it was a strategic divorce. THG Ingenuity now stands alone as a private entity, while the remaining group sheds:
- £80m+ annual lease liabilities
- Complexity from servicing internal tech demands
- Distraction from non-core operations
CEO Matthew Moulding’s commentary says it all: “We’re now fully focused” on Beauty and Nutrition. For investors, this translates to clearer visibility on cash generation.
Segment Deep Dive: Beauty Shines, Nutrition Pivots
THG Beauty: Margin Machine
The star performer delivered:
- 4.6% CCY revenue growth to £1.1bn
- 72% of sales from UK/US (up from 69% in 2023)
- 3.1m Lookfantastic loyalty members spending 34% more than non-members
Strategic exits from low-margin European/Asian markets and cosmetics categories proved prescient. The focus on premium skincare (see: Dr Barbara Sturm, Fenty Beauty launches) and app-based sales (34% of online revenue) creates a virtuous cycle of higher AOVs and stickier customers.
THG Nutrition: Rebrand Blues & Omnichannel Gains
Myprotein’s £579.8m revenue (-8.7% CCY) tells only half the story:
- Offline sales surged via 20,000+ global retail partners
- Myvitamins.com sales up 59% in Q1 2025
- ASP recovery to pre-rebrand levels
While whey price spikes (up 40%+ from 2023) hammered margins, the strategic shift toward apparel, snacks, and licensed products (see Müller partnership) is bearing fruit. Asia remains a headache – yen weakness forced promotional pullbacks – but the US retail footprint expansion to 6,000+ stores by YE 2025 looks promising.
Balance Sheet Chess: Refinancing & Future-Proofing
March 2025’s €445m Term Loan B (maturing 2029) and £150m undrawn RCF provide breathing room. Key implications:
- Capex slashed to £20m/year (from £101.3m pre-demerger)
- Interest costs manageable at 9-10% given current SOFR
- FTSE 250 inclusion boosts institutional appeal
With 72% of debt now post-2027, THG has bought time for its Beauty/Nutrition turnaround play.
Looking Ahead: The 2025 Playbook
Management’s guidance hinges on two catalysts:
1. Nutrition’s H2 Margin Recovery
- Global whey supply normalisation
- Offline mix shift (40% of sales vs. 28% in 2023)
- Myprotein’s brand extensions into food-to-go categories
2. Beauty’s Loyalty Flywheel
- LF Beauty+ membership growth (target: 4m by YE 2025)
- App monetization (personalization features incoming)
- US tariff mitigation via Dermstore’s domestic inventory
Risks? Watch For:
- US consumer softness (25% of Beauty sales)
- UK wage inflation (6%+ impact on fulfilment costs)
- Myprotein’s rebrand hangover (inventory clearance completed)
The Bottom Line: A Bet on Focus
THG 2.0 looks fundamentally different – less “tech-enabled ecosystem”, more premium brand curator. At 0.6x EV/Sales (post-Ingenuity), the market’s pricing in execution risk. But with Beauty margin targets achieved early and Nutrition’s whey woes easing, there’s room for upside surprises. One to watch as H2 margin catalysts materialise.
