THG (LON:THG) executives told investors that 2025 was a “transformational year” for the group, highlighting the successful demerger of Ingenuity at the start of the period and a sharpened focus on consumer brands. Management said the reshaped group is now “more focused and agile” and positioned for future cash generation, with improved momentum heading into the first half of 2026.
For the full year, THG reported revenue growth of 2.3%, which executives described as a recovery from the first half of the year and evidence of improving trends into 2026. The company said the rebound was led by THG Beauty, which delivered a strong second half performance. Management also pointed to a deliberate regional shift toward “higher margin home territories,” where brand equity and operational leverage are strongest.
Beauty recovery led by the U.K., social commerce, and channel mix
THG said it continued to shift customer engagement toward more direct channels, with revenue through its app rising to 29% of total sales. While order numbers were said to be marginally lower, management emphasized customer quality, stating that 89% of revenue came from higher value returning customers. In the company’s largest market, THG said it grew both orders and active customers and increased share versus the broader U.K. beauty market.
Executives also discussed expanding convenience and physical presence, including the launch of same-day delivery with Uber and the opening of a Lookfantastic retail store in Bristol. In the U.S., management said Dermstore built momentum through the second half, with improving average order values and returning customer revenue. THG said Dermstore ranked among the U.S. top 10 online beauty retailers during cyber weekend.
On marketing and social, the company highlighted the scale of creator-driven commerce. Lookfantastic’s TikTok Shop creator community produced more than 90,000 pieces of content and generated over 200 million impressions, according to management. THG also said YouTube remains a key discovery channel, noting that THG Beauty holds a 5% share of voice on the platform and has moved toward an “always-on” approach using AI-driven advertising formats.
Portfolio and territory actions weighed on near-term beauty results
Despite the second-half improvement, management said two strategic decisions created short-term headwinds in THG Beauty but improved the “quality of earnings.” First, the company said it consciously reduced lower margin sales activity and pulled back from certain territories in Europe and Asia to focus on more profitable growth. Second, executives said THG increased lifecycle investment across its own brand portfolio to improve formulations, range, and product appeal, which created a temporary drag on revenue.
Management said the adjusted EBITDA margin in Beauty was affected by a planned step-up in marketing to support long-term growth. The company also cited non-recurring and external factors that produced a “substantial headwind” of 560 basis points, including planned exits from discontinued trading, adverse foreign exchange movements, and other non-recurring items. Executives said these pressures have now largely annualized, leaving a “much cleaner base” going forward.
Among brand-specific actions, THG said Perricone MD migrated from a first-party to a third-party distribution model on Amazon, which impacted short-term sales but is intended to strengthen the brand over the longer term. THG also said it added over 80 new brands during the year, driving a 40% increase in revenue generated from new brands. Fragrance was cited as another growth driver in the U.K., with THG saying the category delivered 11% growth.
Nutrition returns to growth amid commodity and currency pressures
THG Nutrition revenue grew 6.4% in 2025, which management said marked the first period of growth in more than two years. Executives described growth as largely price-led, reflecting disciplined pricing actions in response to inflationary pressures on key inputs. The company also said it continued to diversify into more margin accretive categories, citing growth in non-whey areas such as creatine, active wear, and hydration.
However, profitability in Nutrition faced significant headwinds. Management cited sustained record-high whey commodity prices and persistent weakness in the Japanese yen, which together pressured margins and contributed to a strategic pivot away from a direct-to-consumer model in parts of Asia. Executives said the company is moving toward a partnership-led distribution and licensing model in the region to help mitigate currency fluctuations and reshape the operating model.
THG laid out its approach to managing whey-related risk, emphasizing three areas:
- Procurement and supply cover: securing supply with suitable forward cover in a market where global supply of high-value proteins has struggled to keep up with demand.
- Product and category mix: increasing diversification beyond whey and advancing protein innovation using a wider range of sources.
- Disciplined pricing: incremental pricing reviews aimed at balancing margin protection with market share.
The company also linked protein market dynamics to strong demand in the U.S. and what it described as the emerging impact of GLP-1 drugs on consumer demand. Management said it anticipates more whey capacity coming online in the second half of 2026.
Executives positioned licensing as a key lever to diversify revenue and reduce commodity exposure. THG said more than 43 million licensed Myprotein products were sold into retail during 2025 and that the company is on track to sell over 60 million licensed products in 2026. Management discussed a pipeline including additional Mars flavor collaborations, Vimto ready-to-drink products, and Müller mixes, framing these as steps toward broader retail “meal occasion” positioning.
Margins, cost efficiencies, and a strengthened balance sheet
On profitability, management said gross margin performance reflected two major factors: commodity headwinds in Nutrition and the strategic repositioning of THG Beauty’s own brand portfolio. Despite these pressures, executives emphasized operating efficiency gains. The company said stronger growth in the U.K.—its most highly automated region—helped deliver an 80 basis point improvement in distribution costs, and it achieved a 100 basis point improvement in payroll costs through headcount discipline and increasing adoption of AI.
Adjusted EBITDA was described as resilient, with a modest year-on-year reduction driven principally by Nutrition’s commodity and currency pressures and by planned lifecycle investment in Beauty’s own brands.
Management also highlighted balance sheet actions, calling the refinancing of debt facilities a “transformative transaction.” Executives said the company extended its debt maturity profile to 2029 while materially reducing gross borrowings and net debt. THG ended the year with liquidity of GBP 333 million, comprising GBP 183 million in cash and a GBP 150 million revolving credit facility.
In cash flow, THG reported a working capital outflow of GBP 23 million, which management attributed to a temporary and strategic investment in beauty inventory to ensure high availability and to capitalize on momentum following cyber trading.
VAT claim update and management’s outlook themes
In closing remarks, management revisited a U.K. VAT position related to protein powders, referencing the Global By Nature case, which it said has now been closed without a successful appeal. THG said it has submitted a retrospective claim to HMRC and that HMRC has committed to provide a substantive update at the end of spring 2026. Executives said a successful claim would result in a cash payment of over GBP 60 million, while noting the outcome remains subject to a ruling.
Looking ahead, management said the beauty business is in a “very stable” position and indicated that margin expansion is expected to be driven primarily by Nutrition as diversification, channel mix changes, and protein innovation progress toward medium-term targets.
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.
