THG sales dip as devalued yen hits nutrition business

For the three months ending March 31, 2024, THG total revenues slipped to £459.9m, a 2% fall year on year, driven by a 9% fall in THG Nutrition sales to £150.8m.

THG Beauty by contrast performed well, with sales up 9.3% year on year to £267.6m, while the group’s external THG Ingenuity arm delivered a 4.1% uplift in revenues to £37m.

THG said its performance in beauty in the UK was “notably strong” and “ahead of the overall beauty business” and that app participation grew to 24% of online revenue – “with particularly strong participation in the UK at 35%”.

The group’s beauty business also further increased share in the UK total premium beauty market, although active customers slipped year on year by 2.8%.

Despite the slump in sales, THG said its Myprotein brand “continues to be the fastest growing sports nutrition brand across UK retailers”, having extended distribution by over 1,000 stores in the first quarter.

International markets

THG said sales growth in the first quarter was held back by a c.16% devaluation in the Japanese yen, which accounted for 15% of the brand’s total sales as well as “expected availability gaps as the product range transitions to new branding”.

The retailer said the continued devaluation risk of the Japanese yen is “being addressed with the launch of local manufacturing” in the second half of the year, as well as through licensing agreements.

THG also launched local manufacturing in India in the first half of the year, which it said allows for products to be “more quickly tailored to the needs of the local market”.

Expectations for 2024 full year and medium-term guidance “remain unchanged” with a “continued focus on revenue growth, margin progression and cash generation”.

THG said it continued to follow developments in the Middle East, given that Israel accounts for c.1% of its total sales weighted towards nutrition.

Refined operations

CEO Matthew Moulding said: “Following the group’s return to revenue growth in Q4 2023, it’s pleasing to report an acceleration in Q1, which is testament to the hard work and dedication of our people, who’ve remained focused on the task in hand despite the tough macro-economic backdrop.

“It’s also clear that the accelerated infrastructure investments made during 2019-2022, specifically into our fulfilment network and tech capabilities, are playing a significant part in delivering competitive advantage. With this major capex program behind us, these investments will continue delivering meaningful savings, which accelerate further as new Ingenuity partners are onboarded.

“The Q1 performance of our largest business THG Beauty, is especially encouraging. The operating model changes made throughout 2023, including focusing on more profitable territories and customers, temporarily impacted growth for much of last year, however, since Q4, we are seeing tangible benefits from these actions. This is reflected in THG Beauty’s loyalty membership reaching 2.3m people at the end of Q1, less than two years after launch.

“Beauty delivered double digit growth in the quarter, with a high-quality, loyal customer base bringing greater profitability per order across a more efficient cost base.

“Ingenuity, having pivoted towards larger, multi-service partners, is now also seeing the benefits of its own model changes. Another quarter of solid external revenue growth at +5.9%, is underpinned by monthly recurring revenue growth of +26.3%.

“The response to the Myprotein elevation rebrand has been fantastic. While these changes naturally impact short term revenues as old and new branded products are swapped out, the strong positive response from online consumers and offline retail partners alike underpins confidence once full product availability is restored.”