THG Returns to Revenue Growth Driven by Strategic Model Changes and Financial Strengthening

THG has reported first-half results that align with its guidance, demonstrating a return to revenue growth in the second quarter and a promising start to the latter half of the year. Despite the figures for the initial six months not appearing overtly impressive, the company maintains an optimistic outlook, confident that its business trajectory is moving in a positive direction.

The company highlighted a continuous build-up of positive trading momentum from Q2 into Q3, attributing this success to strategic model changes implemented across both THG Beauty and THG Nutrition throughout 2024, which are now yielding results. This sustained momentum underpins THG's confidence in achieving its full-year and medium-term outlooks.

Furthermore, THG announced that the successful demerger of THG Ingenuity at the beginning of H1, coupled with the Q3 disposal of Claremont Ingredients for £103 million, is significantly accelerating its path towards a net cash position. This strategic financial strengthening is further supported by the H1 2025 refinancing, which has secured long-term committed facilities for the group.

Examining the H1 numbers, THG's consolidated revenue stood at £783.4 million, marking a 2.6% decrease on a constant currency basis. The gross margin saw a slight dip from 42.6% to 41.1%, primarily due to price impacts within its Nutrition business, though it is projected to return to growth in the second half. Adjusted EBITDA fell to £24 million from £37.1 million a year ago, consistent with the trading update issued last month. Performance was weighted towards Q2, with Q3 expected to be "meaningfully higher" as the company experiences its strongest trading performance of the year thus far.

Focusing on its Beauty operations, THG Beauty's revenue dropped by 5.9% in the first half on a constant currency basis, and 12.4% on a reported basis, reaching £479.9 million. Gross profit for the division fell by 14.8% to £190.4 million, with adjusted EBITDA down 29.4% to £20.2 million. These declines primarily reflect the revenue and gross profit results but were partially mitigated by distribution cost efficiencies stemming from increased UK participation. Lifecycle investment and B2B order phasing, encompassing both own-brands and manufacturing, also played a role in these changes.

Looking ahead to H2, THG Beauty is forecast to deliver revenue growth between 1% and 3%. A closer look at Beauty's performance reveals "resilient retail trading," particularly in the UK during Q2 2025, which saw its highest growth rate since Q1 2024, contributing to market share gains. The withdrawal from certain sales activities in Europe and Asia, alongside various non-underlying items such as asset disposals including the luxury portfolio, accounted for over 900 basis points of the H1 revenue decline, with these factors largely annualizing in Q3 2025.

Growth in the Beauty division was significantly driven by new brand launches, with over 70 introduced year-to-date, including Gucci Beauty. Revenue from these new brands is projected to increase by 50% compared to 2024, supported by future personalization developments that will integrate diagnostic technology and tailored product recommendations for specific looks and concerns.

The LookFantastic loyalty program continued its expansion in H1, reaching 3.2 million members, with consumer preference surging by 54% from Q1 to Q2. This growth is a testament to the ongoing strategy of developing and deploying insights from an evolved marketing measurement framework, which focuses on incremental efforts, demand generation, and brand tracking to foster greater brand awareness and cultivate a higher quality of recurring customer base.

CEO Matthew Moulding expressed his satisfaction, stating, "I'm really pleased at how THG has gained momentum throughout the first half and into Q3. A slower start to the year in Beauty, alongside record whey prices in Nutrition, initially held back performance, but we saw clear improvement in Q2, in particular supported by Myprotein offline retail and licensing sales." He added, "As a business we've reaped the benefits of the recent extensive strategic initiatives across the group. Our Beauty business particularly in the UK demonstrated impressive resilience, securing market share gains in Q2, with a growing loyalty base and successful new brand launches supporting a return to revenue growth in Q3."