THG Q4 Revenue Rises 30%

THG (LON: THG), the global proprietary technology platform specializing in bringing brands to consumers, announced a commercial update for the fourth quarter on Tuesday.

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Q4 Highlights and 2022 Outlook

U.K. online shopping platform THG reported Q4 2021 Group revenue of £711.7 million, a 29.7% rise year-over-over, putting it on track for the year.

However, it said its adjusted core earnings margin for 2021 would be lower than market expectations due to unfavorable currency movements and high prices for raw materials such as whey.

THG, which has businesses in beauty and nutrition as well as e-commerce services, said the start of 2022 is expected to be a comparably tougher time due to global lockdowns and record commodity prices.

The company expects 2022 revenue to grow 22% to 25%. FY 2021 adjusted EBITDA margin is expected to be in the range of 7.4% to 7.7%, compared to market expectations of around 7.9%.

THG expects its margins to improve throughout 2022 as investments in automation offset inflationary pressures and the mix of revenue generated by its Ingenuity Commerce platform increase.

CEO Commentary

THG CEO Matthew Moulding said, “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. During the year, the Group also invested around one billion pounds across infrastructure, technology and M&A to further develop the long-term growth prospects of our key trading divisions. We remain committed to our strategy of investing for growth across our global fulfilment network and technology platform.”

Wall Street’s Take

Last month, Barclays analyst Andrew Ross kept a Buy rating on THG with a 630p price target. This implies 275.7% upside potential.

Overall, THG scores a Moderate Buy consensus rating among analysts based one Buy and one Hold. The average THG price target of 433p implies 158.2% upside potential to current levels.

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