The Hut Group reports record annual sales, but warns on profit margins

The Hut Group (THG) has reported a strong increase in revenue in its full-year trading update but said its profit margins are expected to be lower than analysts’ previous estimates.

In the 12 months to December 31, the British e-tail giant reported record revenue of 2.2 billion pounds, up 37.9 percent compared to last year and up 95 percent compared to two years ago, prior to the outbreak of the pandemic.

Revenue in the fourth quarter came in at 711.7 million pounds, a year-over-year increase of 29.7 percent, and a year-over-two-year increase of 95.7 percent.

Breaking it down by divison, the largest, THG Beauty, posted fourth-quarter revenue of 407.9 million pounds, up 36.7 percent on a year ago and up 127.4 percent on two years ago.

Meanwhile, revenue at Ingenuity, the group’s tech platform division, came in at 57.4 million pounds, up 41.8 percent year-over-year and up 65.4 percent year-over-two-years.

Profit margins disappoint investors

But it wasn’t all good news, with the group warning that its profits margins are expected to fall below analysts’ expectations. It said EBITDA margin is expected to be in the range of 7.4 percent to 7.7 percent, compared to market expectations of around 7.9 percent.

The company said it expects its margins to recover this year.

The group’s share price, which has struggled from concerns over its corporate governance in recent months, fell further on the news on Tuesday.

Looking ahead, THG said momentum coming into 2022 “remains strong”, and expects full-year revenue growth of between 22 percent and 25 percent.

CEO Matthew Moulding said in a statement: “We are delighted to report significant growth across all divisions during the peak Q4 trading period and to have delivered record annual sales of 2.2 billion pounds.

“The operational resilience and performance of our Ingenuity infrastructure was a highlight, dispatching over one million units per day at peak periods.

“The investment we have made in automation in the UK delivered year-on-year efficiencies, and we are on track to launch our first AutoStore facility in the US during Q2 2022, supplementing the six warehouses added to the network across three continents during 2021.”