THG revenue growth returns: The early FY23 results released by beauty e-commerce giant and tech specialist THG included some optimistic data, so the company had cause to cheer.

Despite the good news, the company’s stock took a little hit on Wednesday morning, which could have been caused by the founder’s previous comments that hinted at a prospective privatization attempt.

What, therefore, do the figures show? Annual revenue was £2.045 billion, down 8.7 percent overall and 8.4 percent when adjusted for currency fluctuations. External revenue for THG Ingenuity fell 3.4% to £154.1 million, while sales for the Beauty division fell 4.4% to £1.171 billion.

Nevertheless, the company achieved a major milestone when it resumed revenue growth in the latter quarter of the year. Continuing adjusted EBITDA was £120.4 million, with a margin of 6.1%; this was higher than the January 2024 projection of more than £117 million and reflected a notable year-on-year rise of 48.4%.

While praising the company’s accomplishments, THG’s CEO and founder Matthew Moulding said, “In 2023, we made material progress against our strategic priorities, delivering significant profit growth following the support for our consumers through the cost-of-living crisis in 2022.” He highlighted the groundbreaking EBITDA achieved in 2023, which surpassed levels seen before the pandemic.

Following the completion of previous infrastructure investments, THG is already seeing operational leverage. This is especially true in its fulfilment network, which is being optimized through the integration of AI, robotics automation, and the addition of new Ingenuity clients who are taking advantage of existing capacity.

There is encouraging progress, as shown by the resumption to revenue growth in Q4 2023, which has carried over into 2024. After implementing strategic improvements in 2023, THG’s overall group revenue trends showed improvement, especially in the Beauty area. As a result, the company remains enthusiastic about its future.

Looking closer at the numbers, the decision to eliminate loss-making categories is the primary cause of the 8.4% fall in sales on a constant currency basis. In contrast, continuing revenue fell 2.8% on the same basis, which is a much more manageable drop.

Although foreign sales still make up a big chunk of THG’s total revenue—albeit at a little lower percentage than last year—the UK has become an important growth area for the company.

Online sales generated 80% of income for the Beauty sector, which included Lookfantastic, Cult Beauty, and Dermstore. Prestige own brands and manufacturing each contributed 10%. The United Kingdom accounted for more than half of all online retail income, while the United States contributed 20%.

The addition of high-quality new clients and increased relationships by THG Ingenuity, such as Holland & Barrett, Disney, L’Oréal, and Coca-Cola, demonstrated the company’s increasing importance in enabling e-commerce operations for other companies.

Overall, THG’s initial FY23 results show a combination of successes and setbacks, but the company is well-positioned for long-term growth and leadership in the cutthroat beauty e-commerce industry thanks to its strategic efforts.