THG Q4 Earnings Call Highlights

THG (LON:THG) said it ended 2025 with “significant momentum,” pointing to its strongest quarter of the year and a record second half that management said was 14% ahead of the top end of the company’s guidance range. On the call, management attributed the performance to a tighter strategic focus on core categories and geographies, alongside operational streamlining actions and changes to the company’s footprint in less rewarding markets.

Fourth-quarter growth and full-year return to growth

For the fourth quarter, THG reported group revenue growth of 7%, supported by what management described as a successful Cyber trading period. The company said revenues were up around 8% across November and December.

Management said the strength in the second half helped THG deliver its “first full-year growth since 2021,” describing the outcome as a sign of resilience given macroeconomic challenges over the past few years.

Beauty: Lookfantastic strength, loyalty metrics, and store rollout

THG Beauty posted fourth-quarter revenue growth of 6.4%, which management said was “well ahead” of guidance. The company highlighted particularly strong performance from Lookfantastic in the UK and Ireland, where revenue rose 16.2% in the quarter.

Management also pointed to improving customer metrics in Beauty, saying loyalty membership continues to grow alongside spend per account, with retention rates at “all-time highs.” Executives said the Beauty strategy is increasingly driven by a focus on higher-margin prestige brands, customer experience improvements (including partnerships such as Uber Eats), and expanding own-brand visibility through retail collaborations.

On portfolio actions, management said optimization work in Beauty is largely complete. The company referenced prior strategic changes in some European and Asian markets and said those actions are now annualized, which it expects to support cleaner comparisons.

Executives also discussed the early performance of the Lookfantastic physical store in Altrincham near Manchester. While noting stores are outside the CEO’s “personal wheelhouse,” management said the location has traded “incredibly well,” producing both a halo effect for online and results better than initial expectations (which assumed the store might lose some money).

THG said it plans to expand its store footprint cautiously. Management stated a Bristol store is planned but has been delayed by fit-out and other issues. The company said it would like to build a portfolio of stores over time, but emphasized a partnership-led approach where brands share capital expenditures rather than THG funding openings alone. Management suggested it may open the Bristol store plus another location during the year, then proceed steadily.

Nutrition: growth, Asia dynamics, and whey price headwinds

THG Nutrition reported fourth-quarter revenue growth of 8.5%. Management said Myprotein maintained its position as the world’s number one sports nutrition brand and that its offline expansion strategy continues through collaborations and new retail listings.

Responding to questions about regional performance, management said Nutrition growth would have been 12.2% excluding Asia, versus the reported 8.5%. Executives described Asia as the company’s second-largest market and said brand strength remains “really good and really strong,” but highlighted foreign exchange headwinds, particularly yen depreciation. Management also said it is shifting to a licensing model in parts of Japan, which changes how revenue is recorded and adds complexity to comparisons.

Commodity costs were another theme. Management said whey prices remain elevated year over year and reiterated that commodity dynamics have pressured profitability. The CEO noted that, based on internal calculations previously shared publicly, around GBP 65 million of annual profitability has been “temporarily taken” since the IPO due to whey pricing. Executives said they expect commodity prices to normalize over time, while also arguing that strong global demand for protein indicates a larger market opportunity.

THG also highlighted efforts to diversify Myprotein’s mix into higher-margin categories. Management said activewear delivered “excellent growth” in 2025 and is expected to exceed 15% of Myprotein’s revenue mix in 2026.

EBITDA considerations, marketing investment, and free cash flow expectations

While discussing the relationship between revenue strength and profitability, management cited two key factors affecting EBITDA: elevated whey pricing and increased marketing investment. Executives said THG put roughly GBP 3 million of additional marketing spend into the fourth quarter, estimating about GBP 2 million went to Beauty and roughly GBP 1 million to Nutrition. Management framed the increased spend as an opportunity created by the company’s exit from lower-profit territories and improved customer data and dynamics in core markets.

On cash generation, management cautioned against reading too much into a single quarter due to seasonality and working capital movements. Executives said the fourth quarter is typically a strong cash inflow period that offsets a weaker first quarter, and noted the company carried somewhat higher stock cover amid strong sales momentum in Beauty. Management described this as working-capital phasing rather than a structural issue.

Looking ahead, management said that based on where consensus EBITDA expectations sit (referencing “around the 100 mark”), THG would expect to generate approximately GBP 20 million to GBP 25 million of free cash flow in 2026.

VAT dispute update and 2026 priorities

THG provided an update on its HMRC VAT dispute. Management said HMRC lost the case and an application to appeal was denied, but HMRC has since made another request to a higher court seeking permission to appeal. THG said it is maintaining its current approach by continuing to pay VAT to HMRC while the process continues, describing the stance as prudent even though it creates an “unfair” competitive dynamic versus some rivals.

Management said the amount due to THG if it ultimately prevails has risen from about GBP 30 million (when first disclosed) to GBP 55 million. Executives also said the VAT repayment would be for THG and not something that would need to be refunded to consumers, noting the company has been effectively suppressing margins by maintaining the VAT payments.

For 2026, THG said it is confident in its trading momentum. In Beauty, management said it intends to “accelerate” digital leadership using AI and virtual tools to improve personalization. In Nutrition, THG said it will continue global offline expansion, including new range expansions for major U.S. retailers GNC and Kroger that are set to launch in the first half of the year. Across the group, management emphasized a focus on quality, value, and innovation supported by a more streamlined business.

About THG (LON:THG)

THG (www.thg.com) is a global innovator revolutionising how brands connect to a worldwide consumer base. We are transforming how consumer brands go to market in the digital age.

We have built a portfolio of leading digital beauty, health, wellness, and sports nutrition brands that are capitalising on the global growth opportunities, supported by the accelerating consumer shift to the e-commerce channel.

THG is home to three key divisions: Beauty, Nutrition, and Ingenuity. All brands, whether in-house or third parties are powered by our complete commerce division Ingenuity, which is a flexible and scalable offering formed of a combination of complex e-commerce technologies, physical assets, infrastructure, and brand building capabilities.

THG Beauty is home to leading online pure-play retailers for prestige beauty products and brings together global online multi-brand retail subscription boxes, owned prestige brands along with production and innovation.