THG Reports Strong First-Half Profit, Cites EU Tariffs for Slower Q3 Growth
THG’s Financial Performance and Impact of EU Tariffs
First-Half Earnings Surge
Sept 10 (Reuters) - British e-commerce group THG PLC on Thursday reported its first-half core earnings had more than doubled, led by price hikes and strong growth at its Myprotein nutrition brand, but warned that quarterly revenue growth would slow sharply due to new EU import duties.
EU Tariff Changes and Their Implications
Removal of De Minimis Customs Duty Exemption
In July, the European Union removed its €150 de minimis customs duty exemption, moving to a flat charge of €3 per item category, as part of its efforts to curb what it said was unfair competition from online retailers.
Impact on THG’s Revenue
THG said its third-quarter revenue had been partly hit by a European heatwave that slowed demand, but primarily by the EU duty weighing on its beauty unit, with some of its own-brand beauty revenue expected to be booked in the fourth quarter and next year.
Outlook and Future Growth
Short-Term Revenue Growth Forecast
The group said these factors, which it expects to be one-offs, would likely result in revenue growth of about 2% in the third quarter, with a rebound to 6% to 7% growth in the fourth quarter.
Adjusted Core Earnings and Mitigation Strategies
Price Hikes and Commodity Costs
THG's adjusted core earnings for the six months to the end of June jumped 109% to £42.8 million ($58.02 million) on a like-for-like basis, partly aided by price hikes to mitigate rising commodity prices.
Full-Year Outlook
The owner of online beauty retailers Lookfantastic and Cult Beauty kept its full-year outlook in line with market consensus.
Additional Information
($1 = 0.7377 pounds)
(Reporting by Raechel Thankam Job in Bengaluru; Editing by Sonia Cheema)
