THG PLC reported a 7.2% year-over-year revenue increase to £828.7 million in H1 2026, alongside a 78.3% rise in adjusted EBITDA to £42.8 million, despite a 6.85% decline in share price on presentation day. The company’s adjusted EBITDA margin expanded by 210 basis points to 5.2%, driven by cost reductions—distribution costs fell by 70 bps to 12.0% of revenue, and administrative expenses decreased by 150 bps to 23.9%. Net debt rose slightly to £329.7 million, while cash reserves remained robust at £239 million, with an undrawn revolving credit facility. The sale of Claremont Ingredients contributed £103 million, and refinancing of the 2029 term loan B reduced outstanding debt to €445 million from €600 million. Free cash flow guidance for FY 2026 ranges between £25 million and £35 million, with seasonal working capital outflows of £69.6 million in H1 2026, up from £59.7 million in the prior period.
Within its THG Nutrition division, revenue climbed 9.2% to £328.5 million, with branded unit sales rising 57% year-over-year to 58.5 million, on track to hit 130 million for FY 2026. B2B and licensing revenue grew to 16% of total revenue, with licensed units up 146% and retail sales valued at £75 million. Activewear contributed 14% to online sales, with average order values increasing to £51 from £48. Whey costs surged 50% over H1 2024. THG Beauty’s revenue grew 5.9% to £500.2 million, with adjusted EBITDA margins expanding by 80 bps to 5.0%, though gross margins declined 90 bps to 38.8% due to manufacturing order phasing. Over 50 premium brand launches were announced, including collaborations with Clarins, Balenciaga, and Fenty Hair. Customer engagement metrics remained stable, with 7.5 million active users (up 3.9% in the UK and US) and loyalty program membership growing to 3.5 million. AI-driven beauty advisors on Lookfantastic and Cult Beauty platforms drove a 7.5x conversion uplift. A Google pilot program for AI integration is set to launch within six months.
Forward-looking guidance reflects a cautious but optimistic outlook. FY 2026 revenue is expected at £1.802 billion, adjusted EBITDA at £101.7 million, and cash flow at £31.1 million, aligning with consensus estimates. Q3 revenue growth is projected at ~2%, moderating from prior periods, while Q4 growth is expected to reaccelerate to 6%–7%. Medium-term targets include mid-to-high single-digit revenue growth, with THG Beauty aiming for EBITDA margins exceeding 6.0% and THG Nutrition recovering sequentially toward 12%. Capital expenditure is capped at £20–25 million annually, and leverage is projected to fall to ~1.0x by the end of 2027. The company also anticipates an HMRC update on VAT claims by October 2026.
The global nutrition and wellness sector is valued at over £245 billion, with activewear and vitamins sub-segments growing at 6.0% and 5.5% CAGR, respectively. The beauty and personal care market stands at £455 billion, with the premium segment valued at £135 billion and projected to reach £173 billion by 2029. THG’s strategic focus on digital transformation, licensing, and premium brand partnerships positions it well amid industry growth, despite recent share volatility.
