As the online group’s performance continues to soar, Retail Week takes a look at The Hut’s business model.

What is The Hut?

The etail group runs websites including Zavvi, IWantOneofThose and MyProtein. It launched in 2004 as a technology platform business providing white label services for retailers, an area it withdrew from last year to concentrate on its fast-growing retail arm.

Who is behind it?

The etailer was founded by Matthew Moulding, formerly chief financial officer of Phones4U tycoon John Caudwell’s Caudwell Group.  Former Matalan chief executive Angus Monro is non-executive chairman of The Hut, which boasts high-profile backers such as ex-M&S boss Sir Stuart Rose and former Tesco chief executive boss Sir Terry Leahy.

How is it doing?

In its first quarter the etailer’s revenue soared 71%, driven by which it bought in May 2011. The rise followed a 70% jump in sales to £143m in the year to December 31, 2011.

All of its divisions - consumer, lifestyle, prestige and technology - grew in the first quarter, including Zavvi which experienced a 33% revenue jump.

What’s its strategy?

The Hut focuses on non-perishable, FMCG products which lend themselves to repeat orders. It has been diversifying its product base from entertainment, which accounted for 100% of business in 2009 but is down to 35% this year, to higher margin categories such as health and beauty and sports nutrition. It is poised to launch a new website in the category, MyVitamins, in August.

The Hut has also focused on product categories which have low return rates, making the business model even more profitable. Chief executive Matthew Moulding says the retailer’s return rate is in the low single digits.

The retail group steers bulky products, preferring those which require one-man delivery.

Does The Hut plan more sites?

The retailer is always eyeing new opportunities according to Moulding, who says it looks at areas complementary to its existing offer. Moulding says it focuses on cross-selling opportunities across its 6 million customer database and markets accordingly.

The retailer, which has previously snapped up sites including IWantOneOfThose and Lookfantastic Group, will continue its growth both through acquisitions and its own launches.

What’s next for The Hut?

The retailer had hoped for an IPO last year and held a beauty parade of potential advisers. However the float was scrapped due to market conditions. Flotation is clearly still on the agenda but Moulding says he is not sure when it will happen.

He says: “The market is an unusual beast at the moment. We don’t know when it will be right to do it.”

In the meantime, Moulding and his teaml will concentrate on growing the business and putting it in fine form for an eventual Stock Exchange debut.