THG reveals deepening losses a day after takeover approach

Online retailer THG has said that its loss increased massively last year just a day after revealing that it had been approached by a suitor with a potential takeover bid.

The company – formerly known as The Hut Group – said that pre-tax loss had increased from £186 million in 2021 to £550 million last year.

The company said it had taken a hit last year as it invested to keep customers on board during a time where inflation was running hot.

“While 2022 adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) was not where we planned at the start of the year, this was largely the result of our strategy to minimise the impact of inflation upon our customer base,” said chief executive Matthew Moulding.

“This investment in their retention, and longer-term growth, was the principal driver behind the reduction in gross margin.”

Revenue grew by 2.7% to £2.2 billion, THG said. Its beauty business unit grew faster at 4.5% than its nutrition segment, which rose by 2.4%.

The business said that it had managed to save around £100 million by finding efficiencies during the year, and said that it looks like the future will be better for some of the costs it faces.

The news comes a day after THG revealed that it had been approached by a potential buyer.

The retailer said that US buyout firm Apollo had made an initial takeover approach to buy the business, helping its shares soar by around a third.

The business is however still struggling, with its shares down significantly since it listed in London for £5.4 billion at the start of 2021.

The business was valued at just over £1 billion on Tuesday as its shares slid again, by 18%, following the annual result.