LONDON, UK: THG Plc has reported a decline in total group revenue by 8.4% year-over-year (YoY), a move attributed to the company’s decisive action to phase out unprofitable categories. Despite these challenges, the group’s continuing revenue stood at £1.983 billion, a modest decrease of 2.8%, as the focus shifted towards sales and territories with higher profitability, as evidenced by an improved EBITDA.

The UK market emerged as a stronghold for THG Plc, contributing significantly to the growth, while international sales accounted for 54.2% of the group’s total sales, down slightly from 57.1% in the previous year. This global reach, supported by an extensive fulfilment network, continues to present substantial growth prospects.

In the face of pervasive inflation and adverse currency fluctuations, THG Plc managed to expand its adjusted gross margin to 42.8%, up from 41.3% in the preceding fiscal year. This financial fortitude was further bolstered by a reduction in distribution costs to 13.2% of revenue, down from 15.8%, thanks to the group’s investment in automation—a trend expected to gain momentum in FY 2024.

Administrative expenses saw an uptick, primarily due to the inflationary pressures on marketing costs. However, increased engagement with the company’s app platform has helped offset these expenses, with projections indicating continued improvement in this area.

The company’s continuing adjusted EBITDA experienced a significant boost, rising to £120.4 million from £81.2 million, with the margin increasing from 4.0% to 6.1%. The reported adjusted EBITDA also saw an uptick to £114.1 million from £64.1 million, with the margin improving from 2.9% to 5.6%.

THG Plc’s operational efficiency is evident in the substantial reduction of its group operating loss to £185.4 million, down from a staggering £495.6 million. This improvement is largely due to the absence of a one-off non-cash impairment charge of £275.4 million that was recorded in the previous year.

The company achieved a free cash flow breakeven, reflecting its enhanced profitability and disciplined management of working capital, characterized by reduced stock cover and lower cash adjusting items.

Financial stability remains a cornerstone for THG Plc, as it successfully extended its Revolving Credit Facility until May 2026 with the backing of its banking partners. The liquidity position is robust, with approximately £600 million in cash and available facilities at the fiscal year’s end, positioning the company for continued success in the dynamic global market.

Matthew Moulding, CEO of THG, commented: “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. This focus led to the Group delivering record EBITDA after cash-adjusting items in 2023, higher than at the peak of the pandemic.

“Having completed our recent infrastructure investment programme, the Group is now delivering operating leverage. Our fulfilment network is becoming increasingly optimised through a combination of robotics automation, AI and the onboarding of new Ingenuity clients utilising existing capacity.  

“The return to Group revenue growth in Q4 was especially pleasing, and this momentum has continued into 2024.”

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