THG reports losses of £500m

The Hut Group (THG) has recorded an operating loss of almost £500 million in its latest financial year.

The Manchester-based group, which owns luxury fashion brands including Coggles, Allsole, and Mybag, said the losses were largely attributable to a non-cash impairment of around £275 million as well as additional costs.

Other costs included around £32 million towards a “strategic review” of THG’s stock provision, and around £18 million relating to soaring international delivery costs, predominantly affecting Asia due to the absence of traditional delivery routes and elevated costs associated with Covid-19, the group’s financials showed.

The results come as the retailer saw its shares jump by over 40 per cent following a takeover bid from Apollo.

The report also showed that gross margin shrank to 41 per cent from around 45 per cent in 2021. THG chief executive Mark Moulding claimed the decline was a result of its strategy to minimise the impact of inflation on its customer base.

“This investment in their retention, and longer-term growth, was the principle driver behind the reduction in gross margin,” Moulding said.

The financials showed the group’s international sales accounted for over half of its overall revenue, with the US cited as a strong growth opportunity, a result which follows THG’s integrations of US Beauty after adding the brand to its portfolio in 2021.

FY2022 results also revealed that group revenues increased by nearly three per cent to £2.24 billion compared to 2021, resulting in total sales growth of roughly 39 per cent across a two-year period.

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