THG reduces headcount by 500 as losses rise and shares plunge
14 September 2023, 11:44
The retailer said that it had now reduced the number of people it employs by 2,500 since the start of 2022.
Retailer THG said it had reduced its headcount by another 500 people since the start of the year as it reported a jump in its losses.
The Myprotein owner said that it now employed 2,500 fewer people than it did in early 2022, part of a cost-cutting drive which has included investment in automation.
By the end of December last year it had already reduced its headcount by 2,000 people.
It came as the company’s pre-tax losses shot up by nearly a quarter from £108 million to £133 million in the six months to the end of June.
Revenue was down 9.3% during the period as THG sold off some parts of its business. Shares plummeted 17%.
But chief executive Matthew Moulding said the results were “strong”, pointing to a significant rise in adjusted earnings before interest, tax, depreciation and amortisation (EBITDA), a measure of profit which strips out many of a business’s costs.
“Inflationary pressures provided significant challenges to consumers and businesses alike over the past 18 months,” Mr Moulding said.
“Our strategy of supporting our consumers through 2022, sacrificing margins in the short-term, is bearing fruit.
“This is reflected in the strong first half results we’ve posted today, across adjusted EBITDA and cash.”
Despite its focus on keeping customers, THG said that it is trying to sell fewer beauty products at lower margins.
It blamed this for a more than 10% drop in revenue from its beauty division, which includes online shops Lookfantastic, Cult Beauty and Dermstore.
Despite this, margins dropped in the beauty division, from 2.9% to 2%, helping to reduce adjusted EBITDA by more than 40%.
“The beauty division was held back in the first half by short-term global de-stocking impacting manufacturing volumes,” Mr Goulding said.
“The situation has now started to reverse with the beauty division returning to growth since August, at the same time margin progression continues.”
Despite the reductions, THG kept to its adjusted EBITDA guidance for the year.
