The Hut Group (THG) has seen its share price plummet following its update on H1 revenues yesterday. It reported that its overall group revenue fell by 9.3 per cent to £969.3m for the six months to 30 June 2023 which also saw losses rise from £108m to £133m against the same period last year.
As has been widely reported earlier this year, THG had absorbed 2022’s inflationary cost rises rather than pass them on to customers of its sports nutrition products. This sacrifice of margin is bearing fruit.
Damian Sanders, finance director said in a statement that the performance can be attributed to the business having strategically exited non-profitable lines and territories, instead expending all efforts on higher margin sales. “Whilst the effect is a decline in revenue, the Group is pleased to report an improvement in both gross profit margin and adjusted EBITDA metrics which, together with cash, have been a key management focus”.
Matthew Moulding, CEO, added: “Our nutrition division delivered a record H1 revenue performance and, with inflationary pressures easing, posted substantially higher EBITDA margins year-on-year as we exited H1.
“The beauty division was held back in H1 by short-term global de-stocking impacting manufacturing volumes. The situation has now started to reverse with the beauty division returning to growth since August, at the same time margin progression continues.
“Ingenuity’s pivot to larger, more complex Enterprise clients is gaining momentum, reflected in some key client wins and a strong pipeline.”