UK-based beauty retailer and technology company, The Hut Group (THG), has made a significant move in the skincare market with its acquisition of popular US prestige skincare brand, Perricone MD, for $60 million in cash. Perricone MD, which was founded in 1997, is a science-led skincare brand that focuses on topical solutions. This acquisition aligns perfectly with THG’s brand ownership strategy, as the company aims to be the digital-strategic leader in the beauty industry. THG has acquired 100% of Perricone MD at a 1x continuing sales multiple.

Although Perricone MD is currently profitable at the EBITDA level, THG does not expect it to have a significant impact on profits in its first year. However, as THG transitions into a digital-first and global brand with its THG Ingenuity platform, the acquisition is anticipated to be earning accretive by the end of the financial year 2021. The brand is expected to achieve double-digit EBITDA margins, consistent with THG’s previous beauty brand acquisitions.

With the addition of Perricone MD, THG’s portfolio of own brands now includes Espa, Christophe Robin, Grow Gorgeous, Illamasqua, Mio Skincare, Mama Mio, Eyeko, and Ameliorate. The acquisition of Perricone MD further strengthens THG’s position as the leading pureplay specialty beauty brand owner and retailer. CEO Matthew Moulding expressed excitement about the acquisition, highlighting Perricone MD’s strong heritage and loyal customer base. The company sees the online beauty and skincare sector as a rapidly growing market and aims to capitalize on this growth through strategic acquisitions.

THG’s strategy revolves around acquiring industry-leading brands and intellectual property that may be limited by traditional retail channels and geographic reach. By utilizing its THG Ingenuity Platform, THG helps these brands gain direct access to consumers globally while maintaining control over the entire consumer experience. This approach has proven successful, with 50% of THG’s existing portfolio of beauty brands generating revenues through direct-to-consumer sales online, resulting in significant profit margins.

The acquisition of Perricone MD is not entirely new for THG, as its subsidiary Lookfantastic has been selling Perricone MD products for some time. THG’s recent listing on the London Stock Exchange has further solidified its position in the beauty industry. Perricone MD has experienced substantial sales growth on Lookfantastic over the past year, providing THG with confidence in the rationale behind acquiring the brand.

Overall, THG’s acquisition of Perricone MD demonstrates its commitment to expanding its brand portfolio and solidifying its position as a digital leader in the beauty market.

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The Hut Group
Perricone MD