The Hut Group (THG), a leading e-commerce company, has experienced a significant increase in revenues for 2020. Despite facing certain one-off costs that resulted in an operating loss, the company’s adjusted EBITDA showed remarkable growth of 35%. Furthermore, the first quarter of this year has demonstrated continued revenue momentum with an impressive 58% growth.

In the year ending December 31, 2020, THG witnessed a 41.5% rise in revenues, amounting to £1.6 billion. More than 60% of these revenues came from international sources, and with the recent acquisition of Dermstore, it is anticipated that US revenue will contribute to over 20% of the company’s future earnings.

Although THG achieved an adjusted EBITDA of £151 million, representing a 35% increase, it faced an operating loss of £481.8 million. This loss was primarily driven by a non-cash charge of £331.6 million for share-based payments and other costs associated with its IPO, as well as the impact of the Covid-19 pandemic. However, excluding these one-off adjustments, the company generated an operating profit of £45.5 million, which is a significant improvement from the previous year’s £33.5 million.

THG’s various divisions performed exceptionally well throughout the year. Its third-party e-commerce solutions service, THG Ingenuity, saw a 7.3% rise in revenue to reach £137.3 million. This growth was fueled by a substantial increase in revenue from Ingenuity Commerce sites, which rose by 160.4%, as well as a remarkable 324% growth in live sites. THG Beauty, the company’s beauty retail operation, experienced a healthy revenue growth of 57.1% to reach £751.6 million. Additionally, THG OnDemand, which provides personalization and print-on-demand services, achieved a revenue exceeding £100 million, representing a growth of 69.1% compared to the previous year.

THG’s gross profit margin increased to 45.2%, showing a 40-basis-point improvement from 2019. This improvement was mainly driven by strong underlying trading margins in the Nutrition, Beauty, and Ingenuity Commerce divisions. The company also witnessed significant growth in customer numbers, beauty box subscribers, and the number of orders, as consumers increasingly turned to digital channels for product discovery. Repeat rates remained strong, and the company observed positive new customer repeat conversion metrics, indicating the effectiveness of its marketing strategies and the increasing number of customers gained through branded apps. Moreover, THG Society, the company’s influencer partnerships program, experienced substantial growth, with over 19,000 partnerships supporting an increase in active Beauty customers to 6.9 million.

The new year has started positively for THG. In the first quarter, THG Beauty continued to perform impressively with a revenue increase of 90.4% to £220.8 million. THG Ingenuity achieved growth of 32.1%, amounting to £146.3 million, with Ingenuity Commerce revenue rising nearly 190% during the quarter. THG OnDemand experienced remarkable growth of 114% to £26.4 million. Considering all other operations, the total group revenue for the first quarter reached £447.3 million.

Overall, The Hut Group’s performance in terms of revenue growth across its various divisions has been strong. Despite incurring one-off costs that led to an operating loss, the company’s adjusted EBITDA displayed significant growth, demonstrating its ability to adapt and excel in a challenging business environment. With a continued focus on expanding its international presence and diversifying its revenue streams, THG is well-positioned for future success.

Useful Links:
1. The Hut Group Official Website
2. The Hut Group Stock Performance on Bloomberg