Online retail giant THG has revealed plans to spin off its technology platform, Ingenuity, and aims to secure £75 million in funding through equity raise. This decision follows a decline in sales reported by the owner of MyProtein and Cult Beauty in the latest quarter, with a focus on revitalizing the under-pressure nutrition business.
THG recently hinted at a potential demerger of its Ingenuity platform, highlighting efforts to enhance shareholder value. The company informed investors about the upcoming separation of the business, known for working closely with warehouses to streamline online sales processes. Brands such as Holland & Barrett and L’Oreal, along with THG’s own labels like Lookfantastic and Dermstore, utilise the Ingenuity platform.
The strategic move to simplify operations by concentrating on beauty and nutrition divisions, alongside strengthening the balance sheet and increasing cash reserves for investments, was underlined by THG. To fund the demerger, THG intends to raise £75 million through a share placing and subscription, with Chief Executive Matthew Moulding committing £10 million towards this initiative.
In a recent update, THG disclosed a 5.2% decrease in total group revenues to £442.8 million for the quarter ending September 30, with continuing revenues down by 2%. Despite growth in beauty and ingenuity segments, a decline in nutrition sales offset the positive performance. Nutrition revenues dropped by 13.1% during the quarter, showing signs of improvement as the period progressed.
Matthew Moulding commented on the developments, stating, “Today we have separately announced significant progress on our strategy to demerge THG Ingenuity into a private company supported by major shareholders.” He expressed satisfaction with the solid performance of the Beauty and Ingenuity businesses, following significant operational enhancements in 2022 and 2023. The hurdles faced during the rebranding of MyProtein have been overcome, with Nutrition achieving its best sales performance since January in September.
The decision to separate Ingenuity reflects THG’s strategic focus on driving growth and efficiency within its core business areas. As the company moves forward with this plan, it aims to position itself for future success and sustainable growth in the competitive online retail landscape.