The Hut Group lifts profit forecast after strong sales in Covid crisis

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The Hut Group, the recently floated online retail company run by billionaire Matthew Moulding, has upgraded its profit forecasts after strong sales at its beauty and sports nutrition brands during the coronavirus pandemic.

The Manchester-based company which floated on the London Stock Exchange in September, said sales rose 51% to £558.7m during its fourth quarter, beating previous expectations of an increase of between 40% and 45%.

The Hut Group (THG), which runs the websites Lookfantastic, Glossybox and Zavvi as well as beauty brands such as Espa and Illamasqua and the sports nutrition company Myprotein, said sales had benefited from strong demand for beauty products including self-tanning kits, vitamin tablets, Myvegan supplements and hand sanitiser during the Covid-19 pandemic.

As a result, THG said it was expecting 2021 revenues to be 30% to 35% ahead of last year’s, up from its previous estimate of 20% to 25%.

Matthew Moulding, the co-founder who serves as executive chairman and chief executive, told analysts and investors that the “key standout was the beauty division”.

He said the company had hired 3,000 people, largely within the UK, taking its global workforce to 10,000, and opened five new warehouses across the world. Black Friday had been strong, he said, and the firm’s websites typically got 20 times their usual orders in a day.

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The Hut Group made a strong stock market debut in mid-September, when its shares rose by a quarter to 625p. After the success of the stock market debut, Moulding was handed one of the biggest payouts in UK corporate history – an £830m share award.

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The shares rose 1% to 798p on Tuesday, giving the firm a market value of £7.75bn – up from £5.6bn on the first day of trading – and valuing Moulding’s 25% stake at nearly £2bn.

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Last month, THG bought the US beauty website Dermstore and it has struck partnerships with the fragrance brand Creed, and GlaxoSmithKline for its vitamins portfolio in the UK.

The Hut Group was founded in 2004 by the former Phones4u executives Moulding and John Gallemore to sell CDs online, and expanded rapidly by exploiting a now closed tax loophole that allowed companies to avoid VAT on small goods, including CDs and DVDs, by posting them to the UK from the Channel Islands.

The firm sought to improve corporate governance by appointing another independent director, taking the number of independents on the eight-member board to four. The Hut Group has been criticised for handing Moulding both the executive chairman and chief executive roles, along with a “golden share” that allows him to block hostile takeover attempts for three years.