THG shrugs off £495m operating loss as luxury retailer mulls Apollo buyout
THG has revealed an operating loss of £495.6m as the online retailer admitted having to fork out for soaring international delivery costs and a strategic review of its stock
The London-listed e-commerce platform posted a 2.7 per cent jump in group revenues to £2,239.2m, compared to £2,179.9m the previous year, as the company undergoes a discontinuing strategy primarily on its THG OnDemand division.
While this strategy helped boost earnings, the Manchester headquartered group, said gross profit margin reduced to 41.3 per cent to 44.7 per cent in 2021, as THG felt the pressure of high material costs such as whey.
Matthew Moulding, chief executive of THG, said: “The challenging macro and inflationary environment required decisive action across the business with around £100 million of efficiency savings delivered.
“A much-improved outlook on many key cost inputs gives us confidence in an improved financial performance as the year progresses.”
The beauty and luxury goods seller remained hopeful despite its 8.6 per cent loss in group revenue in the first leg of this year, noting that it was “planned for” as a “result of prioritising higher margin sales”.
“Our focused approach to enhancing profitability has led us to de-emphasise certain geographies where we are unable to benefit from the economies of scale associated with our local distribution hubs,” added THG.
Earlier this week, shares in THG skyrocketed almost 40 per cent after it revealed that it received a preliminary buyout proposal from private equity firm Apollo Global Management.
Apollo must announce a firm intention to make an offer by 15 May or walk away, THG said in a statement, not revealing details of the potential deal.