THG PLC (LSE:THG) has reported much slower growth in the third quarter but is confident of hitting its full-year targets as the online retailer said consumer behaviour “remained stable and consistent” in its health and beauty categories.
In a trading update, the owner of the Hut Group generated £518.6mln of revenue for the quarter, a rise of 2.1% on the previous year, which compared to 12.3% growth in the first half of the year.
Beauty sales were up 4.9% compared to 20% in the first half, while the group's Nutrition arm saw 2.9% growth improve from 1.1% in the first half.
Revenue growth at Ingenuity, THG's eCommerce services arm, slowed to 1.3% in the third quarter, down from 13.9% in the year-to-date, while revenue growth at OnDemand, its personalisation and customisation business, declined by 18.5% in the third quarter, and was down 7.4% in the year-to-date
The London-listed group said Ingenuity was being “repositioned” under a new chief executive to focus on larger-contract clients, and that “dilutive revenues” on OnDemand were “scaled back in territories awaiting delivery of localised personalisation infrastructure”.
THG said it has made a “positive start” to the fourth quarter “with momentum expected to accelerate as the group enters its peak trading period”.
Management continues to guide towards full-year underlying profit (EBITDA) of £100mln-£130mln before reclassification of software-as-a-service (SaaS) costs, which are how Ingenuity charges its licences to provide services to clients.
At the half-year stage THG had said the EBITDA guidance was reflecting revenue growth of 10.0%-15.0%, a strategy to lower prices less than competitors in order to grow market share, energy cost inflation and £8mln of SaaS costs.
THG shares jumped 15% to 53.56p in early trading on Tuesday, having fallen to a new all-time low below 35p earlier in the month.