TIDMTHG
RNS Number : 4911H
THG PLC
04 August 2021
04 August 2021
THIS ANNOUNCEMENT INCLUDES INSIDE INFORMATION
THG PLC
The Digital Brands Group
ACQUISITION OF CULT BEAUTY LIMITED
GBP275m acquisition of UK-based pure-play online prestige beauty
retailer
Highly complementary to THG Beauty's existing portfolio with
compelling strategic benefits, adding c. 200 new brands, 1.7m
highly engaged customers and 1.6m Instagram followers, whilst
supporting deeper category penetration using THG's wide range of
Ingenuity services
FY 2022 impact for THG of c. GBP140m Sales and c. GBP10m
adjusted EBITDA
On a constant currency basis, FY 2021 Group sales growth now
expected to be between +38% and +41%, representing an increased and
tightened guidance range (previously between +30% to +35%)
FY 2021 reported Group sales growth guidance raised to +35% to
+38% (GBP2.18bn to GBP2.23bn)
Good progress made under the Ingenuity collaboration agreement
with SB Management Limited ("SBM"), a wholly owned subsidiary of
SoftBank Group Corp.
Ahead of schedule for technical separation of each of the
Group's key trading divisions in 2022
THG PLC ("THG" or the "Group"), the proprietary technology
platform specialising in taking brands direct to consumers ("D2C"),
has agreed to acquire Cult Beauty Limited ("Cult Beauty"), the UK
based online beauty retailer of prestige and emerging independent
brands. The total consideration of GBP275m represents a c. 2.0x FY
2022 sales multiple.
Strategic Impact
-- Cult Beauty's portfolio of emerging and independent 3(rd) party
brands is a compelling addition for THG Beauty, the globally
pre-eminent digital-first prestige brand owner, brand builder,
manufacturer and retailer. THG x Cult Beauty: https://f.io/w7xM7N2y
-- Cult Beauty is the authorised online retailer of c. 300 prestige
3(rd) party brands across skincare, haircare and cosmetics,
including Charlotte Tilbury, Drunk Elephant and Huda Beauty,
around two-thirds of which are not currently listed on existing
THG Beauty sites, representing an opportunity to broaden consumer
choice globally. Due to its distinguished brand portfolio, Cult
Beauty will retain a very clear identity within THG Beauty.
-- Currently less than 50% of Cult Beauty's sales are international,
representing a compelling opportunity to accelerate overseas
growth through the THG Ingenuity platform's well-proven internationalisation
capabilities.
-- THG Beauty's position as the industry's digital strategic partner
globally provides a substantial opportunity to offer an enhanced
service to Cult Beauty's brands across its beauty subscription
box business and digital marketing services, new product innovation
and manufacturing know-how, in addition to THG Ingenuity powering
the D2C digital transformation goals of brand partners.
Financial Impact
-- THG is acquiring Cult Beauty from private shareholders including
majority investor Mark Quinn-Newall (co-founder of Net-a-Porter)
and co-CEO Alexia Inge, for GBP275m on a cash and debt-free
basis.
-- Cult Beauty is expected to contribute sales of c. GBP60m and
adjusted EBITDA of c. GBP3m for the remainder of FY 2021.
-- Through delivery of planned synergies including re-platforming
onto the THG Ingenuity platform, management anticipate adjusted
EBITDA margins to increase and move in-line with Group adjusted
EBITDA margins within 18 to 24 months, and contribute sales
of c. GBP140m and adjusted EBITDA of c. GBP10m in FY 2022.
-- The Group has continued to trade strongly and on a constant
currency basis is ahead of prior management expectations, inclusive
of the acquisitions of Bentley Laboratories LLC and Cult Beauty.
The Group is today announcing both a tighter and increased range
of +38% to +41% revenue growth for FY 2021 on a constant currency
basis, upgraded from Q1 2021 guidance of +30% to +35%. Taking
into account foreign exchange movements since prior guidance,
the Group expects to deliver reported revenue growth of +35%
to +38% for FY 2021.
-- We remain confident in the Group's underlying markets and the
continuation of our customer behaviour metrics as outlined in
the Q1 trading statement.
Matthew Moulding, Executive Chairman and CEO of THG,
commented:
"Cult Beauty is frequently the partner of choice for emerging
indie brands due to its personalised , content-led approach and
enthusiastic consumer base who are continually seeking new,
innovative solutions to complement their beauty routines.
"Cult Beauty's first-to-market reputation makes the brand an
exciting fit for our THG Beauty division. When retailing brands to
consumers THG Beauty will run with two unique fascias within our
main continents: THG will principally service customers within
North America via our Dermstore and Lookfantastic brands, while in
the UK, Europe, Asia and the Rest of the World the key brands will
be Lookfantastic and Cult Beauty.
"We anticipate fully migrating Cult Beauty onto the THG
Ingenuity platform by the end of the year (within the first six
months of acquisition), giving the brand access to the global
digital features to underpin significant future growth. Further to
the announcement made on 2(nd) February 2021, we are also pleased
to confirm the Dermstore integration strategy remains on plan with
the migration to Ingenuity already completed ahead of
schedule."
SBM update and Financial Calendar
-- Further to the announcement made on 10(th) May 2021, the
Group is pleased to report progress ahead of schedule
for the separation of each of the Group's key trading
divisions in 2022, having previously guided up to 15 calendar
months from announcement, with a right to extend by up
to a further six calendar months where reasonably required.
-- The Group expects to deliver a further update alongside
its Interim Results in mid-September 2021.
Investor enquiries - THG PLC
Kate Grimoldby/Clara Melia Investor.Relations@thg.com
Media enquiries:
Powerscourt - Financial PR adviser Tel: +44 (0) 20 7250
1446
Victoria Palmer-Moore/Nick Dibden/Nick thg@powerscourt-group.com
Hayns
THG PLC
Viki Tahmasebi Viki.tahmasebi@thg.com
S
Notes to editors
Cult Beauty ( www.cultbeauty.com ) was launched in London in
2008 by co-founders Jessica DeLuca and Alexia Inge as an online
specialist retailer of emerging, prestige beauty brands across
skincare, haircare and cosmetics. Over 70% of brands are
independent, with Cult Beauty's strong on-site content and social
media presence (1.6m Instagram followers), acting as an educational
source for beauty enthusiasts searching for the newest trends and
products, as well as providing guidance for beauty novices.
Cult Beauty's brand portfolio is curated by an in-house team
that actively seek out "cult status" brands and products with a
strong track record of exclusive UK launches. Cult Beauty has
delivered strong growth in the recent historical period which
accelerated during Covid as online participation in the category
increased, supporting robust repeat purchase rates.
THG ( www.thg.com ) is a vertically integrated, digital-first
consumer brands group, retailing its own brands in beauty and
nutrition, plus third-party brands, via its proprietary,
end-to-end, e-commerce technology, infrastructure and
brand-building platform (THG Ingenuity) to an online and global
customer base. THG's business is operated through the following
businesses:
THG Ingenuity: Ingenuity Commerce provides an end-to-end
direct-to-consumer e-commerce solution for consumer brand owners
under 'Software as a Service' (SaaS) licences. The wider Ingenuity
division provides stand-alone services, including hosting, studio
content, translation services and beauty product development and
manufacturing.
THG Beauty: The globally pre-eminent digital-first brand owner,
retailer and manufacturer in the prestige beauty market, combining
its prestige portfolio of eight owned brands across skincare,
haircare and cosmetics, the provision of a global route to market
for over 1,000 third-party beauty brands through its portfolio of
websites, including Lookfantastic, Dermstore, Skinstore and Mankind
and the beauty subscription box brand GLOSSYBOX.
THG Nutrition: A group of digital-first Nutrition brands, which
includes the world's largest online sports nutrition brand
Myprotein, and its family brands (Myvegan, Myvitamins, MP Clothing
and Myprotein Pro), with a vertically integrated business model,
supported by six THG production facilities.
THG OnDemand: Personalisation and customisation is a key
offering within THG OnDemand, enabling brands to offer unique
products to a vast range of consumers across THG's global
territories through websites including Zavvi, IWOOT and Pop in a
Box.
Other: Luxury D2C websites including Coggles, AllSole and MyBag,
in addition to THG Experience. The latter comprises prestige events
locations at Hale Country Club & Spa, King Street Townhouse
Hotel and Great John Street Hotel, providing deeply experiential
brand building environments, most notably in support of THG
Society, the Group's proprietary influencer marketing platform.
THG (eco): THG (eco) is the driving force behind the Group's
sustainability action plan. THG (eco) covers the core pillars of
THG's sustainability commitment: the planet, sustainable resources,
people and livelihoods.
Cautionary Statement
Certain statements included within this announcement may
constitute "forward-looking statements" in respect of the group's
operations, performance, prospects and/or financial condition.
Forward-looking statements are sometimes, but not always,
identified by their use of a date in the future or such words and
words of similar meaning as "anticipates", "aims", "due", "could",
"may", "will", "should", "expects", "believes", "intends", "plans",
"potential", "targets", "goal" or "estimates". By their nature,
forward-looking statements involve a number of risks, uncertainties
and assumptions and actual results or events may differ materially
from those expressed or implied by those statements. Accordingly,
no assurance can be given that any particular expectation will be
met and reliance should not be placed on any forward-looking
statement. Additionally, forward-looking statements regarding past
trends or activities should not be taken as a representation that
such trends or activities will continue in the future. No
responsibility or obligation is accepted to update or revise any
forward-looking statement resulting from new information, future
events or otherwise. Nothing in this announcement should be
construed as a profit forecast. This announcement does not
constitute or form part of any offer or invitation to sell, or any
solicitation of any offer to purchase any shares or other
securities in the Company, nor shall it or any part of it or the
fact of its distribution form the basis of, or be relied on in
connection with, any contract or commitment or investment decisions
relating thereto, nor does it constitute a recommendation regarding
the shares or other securities of the Company. Past performance
cannot be relied upon as a guide to future performance and persons
needing advice should consult an independent financial adviser.
Statements in this announcement reflect the knowledge and
information available at the time of its preparation.
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