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(Alliance News) - Online retail platform operator THG PLC on Tuesday reported strong revenue growth last year, but flagged a margin hit from foreign exchange movements and slower sales growth in the year ahead.
The company's shares fell by almost 9% in response early Tuesday in London.
Fourth-quarter revenue was GBP711.7 million, up 27% on a year ago and nearly double on a two-year basis. For 2021 as a whole, revenue rose 35% to GBP2.18 billion.
However, the beauty products retailer's full-year adjusted earnings before interest, tax, depreciation and amortisation margin is expected to be in the range of 7.4% to 7.7%, compared to market expectations of around 7.9%, after taking into account 90 basis points of adverse foreign currency movements, it said.
For 2022, the margin is expected to improve throughout the year, and revenue growth is seen in a region of 22% to 25% at constant currencies, slowing from the 38% achieved in 2021.
Revenue from Ingenuity Commerce - the e-commerce technology platform that THG offers to other retailers and that is expected to be a driver of company growth - remained a small part of the total at GBP15.4 million in the fourth quarter, though this was more than doubled from GBP7.3 million a year before.
For all of 2021, Ingenuity Commerce revenue was GBP45.4 million, up from GBP19.3 million in 2020 but still only 2.1% of total revenue.
THG Beauty remained the main revenue provider in 2021 at GBP1.12 billion, up 49% from GBP751.6 million.
THG said it has a "substantial pipeline of site launches within THG Ingenuity", and the company repeated its revenue guidance for the division in 2022 of GBP108.0 million to GBP112.0 million.
"Despite challenging conditions, we have scaled revenue and expanded our business model, particularly THG Ingenuity, well ahead of expectations given at our IPO 16 months ago," said Chief Executive Officer Matthew Moulding.
He added: "The new year has started well, and we remain confident in delivering our strategic growth plans during 2022 and beyond."
THG shares were down 8.7% at 169.38 pence Tuesday morning, well below the 500p at which the stock debuted in September 2020.
"The only way THG is going to win back the market's favour is if it delivers better-than-expected figures consistently for at least two or three quarters," commented AJ Bell investment director Russ Mould. "Unfortunately, its latest update doesn't pass the test as it flags margins are slightly below expectations."
Mould added: "The fact THG is guiding for revenue growth to slow in 2022 is even more reason for disgruntled investors to keep shaking their heads in disbelief."
By Tom Waite; thomaslwaite@alliancenews.com
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