THG, the online beauty and e-commerce services group, has reported a decline in sales during the third quarter. However, there are signs of recovery as the company returned to revenue growth on a constant currency basis in September. Overall, group revenue fell by 4.4% in the third quarter, with a 2.1% decrease on a constant currency basis. Despite the overall decline, THG’s shares rose by 6% following the announcement.

Within the quarterly figures, THG’s Beauty division saw a decrease in revenue of 4.4% to £272 million, and a 2% decrease on a constant currency basis. The Ingenuity e-commerce services division also experienced a decline in revenue, down 8.8% during the quarter and 8.4% on a constant currency basis at £155.7 million. However, there has been improvement compared to the year-to-date figures, with THG Beauty down 8.5% and Ingenuity down 13%.

THG stated that the third quarter was its best quarterly revenue performance in the last year. The company’s performance improved each month during the quarter and returned to constant currency growth in September. However, the full-year revenue guidance remains unchanged, with estimates ranging from flat to a 5% decrease. THG emphasized that each division is making progress towards achieving sales growth and rebuilding margins.

The impact of global de-stocking on THG’s beauty manufacturing business has eased, leading to a return to growth for THG Beauty in September. The division saw a total increase of 1.7% and a 5.1% increase on a constant currency basis. THG attributed the improved performance in the third quarter to a strategy focused on higher-margin sales and reducing orders that do not yield immediate returns.

In regards to the Ingenuity division, THG acknowledged that enterprise sales cycles have been longer than anticipated. However, progress can be seen in the September sales performance, which only decreased by 2.3% compared to a 14.9% decrease year-to-date. Monthly recurring revenue in Ingenuity also continued to build in September, rising by 7.6%, driven by both existing clients and new business opportunities.

THG highlighted its investment in improving the customer proposition for UK active customers in the Beauty division. This included extended next-day delivery cut-offs and faster delivery times compared to the third quarter of 2021. The company reported a 17% improvement in delivery times, resulting in increased customer satisfaction.

CEO Matthew Moulding expressed satisfaction with the progress made across all divisions during the third quarter. He emphasized the pivots made within each division to navigate the challenges of a high inflation global environment. Moulding also mentioned the positive momentum the company experienced at the end of the quarter, with the group returning to positive constant currency revenue growth in September, driven by the strong performance of the Beauty division. THG remains focused on restoring margins to pre-inflation levels and maintaining its commitment to cash generation. The company’s operations and inventory are well positioned for peak trading, with the benefits of investment in automated fulfillment centers positively impacting delivery times and customer satisfaction.

Useful links:
THG Official Website
BBC Business News