Online demand for beauty products surges during the pandemic, as retailer The Hut Group hikes revenue outlook again

Online demand for beauty products surges during the pandemic, as retailer The Hut Group hikes revenue outlook again

Shares in The Hut Group rose almost 2% on Tuesday, after the e-commerce retailer hiked its sales guidance for the third time since its initial public offering in September 2020, buoyed by a surge in demand for its beauty products during the COVID-19 pandemic.

FTSE 250-listed THG
which helps sell retail brands, including Lookfantastic, skin care group ESPA, and sports-nutrition player, said revenues in the three months to Dec. 31, 2020, rose 51%, above its previous guidance of 40%-45% given on Dec. 7.

Growth was particularly strong in the online beauty business, where revenues increased 66% to £298 million during the quarter, while nutrition sales rose 39.6% to £158 million.

THG, whose Ingenuity e-commerce technology platform serves blue-chip customers such as Nestlé
Walgreens Boots Alliance

and Procter & Gamble
said it added 3.5 million new active customers during its fourth quarter, with 10.7 million added over the full year overall.

Read: Plastic-surgery demand perks up amid COVID-19 pandemic’s persistence

“Following our successful listing on the London Stock Exchange in September 2020, we have accelerated our sales growth across all areas of the Group, underpinned by record new customer numbers,” said THG Chief Executive Matthew Moulding. “We have also started reinvesting capital raised at IPO, including over £360 million in M&A [mergers and acquisitions], principally within the U.S. beauty sector.”

In December, THG struck a trio of deals, including the all-cash $350 million takeover of U.S. online beauty retailer which it bought from retail chain Target. The deal will mean that 20% of THG’s sales will now come from the U.S., compared with 13% before the takeover.

Since floating on the London Stock Exchange in September, shares in THG have risen almost 60%, giving the company a market valuation of £7.8 billion. The stock rose more than 2% in London morning trading on Tuesday.

The new forecast from THG came as Games Workshop
the maker of Warhammer figurines, reported “record sales, profit levels and cash” as it benefited from COVID-19 lockdowns and stay-at-home restrictions on its customers.

In the six months to Nov. 29, 2020, Games Workshop

reported a pretax profit of £91.6 million, compared with £58.6 million a year ago. Revenues jumped to £186.8 million during the period, up from £148.4 million. In an update in December, the company had guided to profit of not less than £90 million and sales of around £185 million.

“Another cracking performance from a truly amazing, global team; a solid six months building on the great progress and profitable growth we have been consistently delivering over the last five years,” said Chief Executive Kevin Rountree in a statement.

Videogames soared in popularity last year as people spent more time at home, benefiting companies like Games Workshop, which now commands a market valuation of almost £4 billion. Shares in Games Workshop were down 3.4% in early London trading on Tuesday.

Read: Videogames are a bigger industry than movies and North American sports combined, thanks to the pandemic

FTSE 250-listed Games Workshop attributed the record performance to a “step change” in its range of Warhammer 40,000 figurines across the world, adding that it had performed “particularly well” in North America where it has increased investment.

“The shares have certainly seen some decent gains since the middle of last summer and made a record close yesterday, so today’s declines could be simply a case of locking in profits,” said Michael Hewson, chief market analyst at CMC Markets.

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