THG is strategically demerging its technology division, Ingenuity, to bolster shareholder value.
- The company is considering various structures for the demerger without a set timeline.
- Post-demerger, THG will focus on its beauty and nutrition sectors.
- A slight increase in profits was reported, despite a dip in overall sales.
- THG anticipates growth in sales momentum in the upcoming quarter.
THG has announced its decision to demerge Ingenuity, its technology platform, marking a significant step towards enhancing shareholder value. The company is currently evaluating different approaches to implement this separation, although a definitive timeline is yet to be established. This move will allow THG to concentrate efforts on its core beauty and nutrition divisions.
For the half year concluding on 30 June, THG reported a modest 1.6% rise in profits, although this was accompanied by a 1.7% decline in sales. The demerger comes at a time when THG’s beauty division has shown promising growth, with sales escalating by 5.7% to reach £531 million, and adjusted EBITDA achieving £32.6 million.
In contrast, Ingenuity’s sales saw a robust growth of 14.1%, amounting to £80.2 million, with its EBITDA hitting £11 million. These figures have helped mitigate temporary setbacks in the nutrition segment following its recent rebranding.
Looking forward, the group is optimistic about returning to sales growth in the third quarter, buoyed by improved momentum within THG Nutrition. This confidence is partly underpinned by a new multi-year collaboration with Frasers Group, which integrates the Frasers Plus credit offer into the Ingenuity platform.
Moreover, THG’s partnership with the Mike Ashley-controlled Frasers Group has further expanded through the acquisition of its luxury brands, including Coggles. These strategic moves are anticipated to fortify THG’s market position as it transitions into a focused entity post-demerger.
The strategic demerger of Ingenuity is poised to refine THG’s operational focus and drive future growth.
