The Hut Group

THG CEO Matthew Moulding

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E-commerce giant The Hut Group has expanded its beauty portfolio with the £275m acquisition of online prestige retailer Cult Beauty.

The business is authorised to sell about 300 independent third-party brands across skincare, haircare and cosmetics, including Charlotte Tilbury, Drunk Elephant and Huda Beauty.

Close to 200 of the brands are new to THG’s beauty sites, helping broaden the direct-to-consumer specialist’s consumer reach. THG said Cult Beauty would retain “a very clear identity” within THG Beauty given its “distinguished brand portfolio”.

With less than 50% of revenues coming from overseas, THG added there was “a compelling opportunity” to accelerate Cult Beauty’s international growth through the group’s Ingenuity platform, which provides DTC tech for third parties.

Cult was launched in London in 2008 by co-founders Jessica DeLuca and Alexia Inge as an online specialist retailer of emerging, prestige beauty brands across skincare, haircare and cosmetics.

THG is acquiring Cult Beauty from private shareholders, including majority investor Net-a-Porter co-founder Mark Quinn-Newall and co-CEO Alexia Inge.

THG expected the business to contribute sales of about £60m and adjusted EBITDA of £3m for the remainder of the 2021 financial year, climbing to £140m sales and £10m adjusted EBITDA in FY 2022.

The deal follows the agreement struck by THG with Japanese tech investor giant SoftBank in May, which provided $1bn in fresh capital for its M&A strategy. At the time, THG also announced a $255m takeover of US upmarket beauty products manufacturer Bentley Laboratories.

THG CEO Matthew Moulding said: “Cult Beauty is frequently the partner of choice for emerging indie brands due to its personalised, content-led approach and enthusiastic consumer base who are continually seeking new, innovative solutions to complement their beauty routines.”

He added Cult Beauty’s first-to-market reputation made the brand “an exciting fit” for the THG Beauty division.

When retailing brands to consumers, THG Beauty will run with two fascias, with THG principally servicing customers in North America via the Dermstore and Lookfantastic brands, while in the UK, Europe, Asia and the rest of the world the key brands will be Lookfantastic and Cult Beauty.

“We anticipate fully migrating Cult Beauty onto the THG Ingenuity platform by the end of the year (within the first six months of acquisition), giving the brand access to the global digital features to underpin significant future growth,” Moulding said.

Shares in THG opened 2.7% higher at 595.2p today.

Morning update

The FTSE 100 is up 0.4% to 7,132.26pts first thing.

Early risers include Hotel Chocolat Group, which is up 6.4% to 383p so far, with Deliveroo up 2.9% to 328.3p and Bakkavor up 2.2% to 129.4p.

Just Eat Takeaway is down 2% to 6,264p in the early going, with Glanbia down 1.7% to €14.65, Naked Wines down 1.5% to 835 and Heineken down 1.1% to €96.96.

Yesterday in the City

The FTSE 100 climbed 0.3% to 7,105.72pts yesterday.

Greggs shareholders endured a miserable day despite the high street bakery chain flying back into profitability and outperforming expectations in the second quarter of its first half. Investors continue to be jittery around food and drink retailers and suppliers warning about rising input costs, with Greggs shares falling 2.9% to 2,724p yesterday after it flagged commodity price pressures increasing.

A worry about increased cost inflation later in the year also spooked investors of Irn-Bru maker AG Barr. The stock slipped 0.1% to 565.7p despite posting an 18% jump in first-half revenues and upgrading profit expectations for the year.

Elsewhere, Domino’s Pizza Group had a better day, with shares 2.3% higher to 431.6p after sales in the UK and Ireland soared 20% to more than £750m in the first half of 2021.

Other risers yesterday included McBride, up 3.6% to 87.4p, Sainsbury’s, up 2.4% to 292p, and Premier Foods, up 2% to 111.2p.

McColl’s Retail Group, Naked Wines and Kerry Group were also among the fallers for the day, down 3.9% to 34.5p, 3.1% to 848p and 2.8% to €124.80 respectively.

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