THG PLC (FRA:HG0) Full Year 2025 Earnings Call Highlights: Strategic Moves and Market Challenges

This article first appeared on GuruFocus .

Release Date: March 26, 2026

For the complete transcript of the earnings call, please refer to the full earnings call transcript .

Positive Points

• THG PLC ( FRA:HG0 ) reported a full year revenue growth of 2.3%, with significant contributions from THG Beauty, particularly in the UK.

• The company successfully completed the demerger of THG Ingenuity, creating a more focused consumer brands business.

• THG Beauty saw a 16.2% increase in sales during the cyber trading period, highlighting strong performance in key markets.

• The company achieved a significant improvement in distribution and payroll costs, driven by efficiency measures and AI adoption.

• THG PLC ( FRA:HG0 ) extended its debt maturity profile to 2029 and reduced gross borrowings, closing the year with a solid liquidity position of 333 million.

Negative Points

• THG Nutrition faced challenges due to high commodity prices and currency fluctuations, impacting margins.

• The strategic repositioning of THG Beauty's own brand portfolio caused a short-term drag on revenue.

• The company experienced a working capital outflow of 23 million due to strategic investment in beauty inventory.

• The shift away from the D2C model in Asia led to temporary sales reductions in those regions.

• The company faced substantial headwinds from adverse foreign exchange movements and non-recurring items, impacting overall performance.

Q & A Highlights

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Q: Can you provide an update on the VAT claim and its potential impact on pricing and margins? A: We have claims totaling about 78 million with HMRC, and we expect significant margin improvements from the zero-rated VAT treatment and falling whey prices. While consumers may see some benefits over time, our competitive position has already been strong due to our prudent approach. (Unidentified_5)

Q: How do you plan to defend the nutrition segment against specialized players, and what are the cross-selling opportunities? A: Our strong community and brand recognition allow us to effectively compete. We leverage partnerships, such as with Mars, and focus on quality to maintain our position. The athleisure segment has seen significant margin improvements, and we continue to expand our product offerings. (Unidentified_5)

Q: What are the growth targets for THG Beauty outside the UK, and how do you plan to defend your position? A: We have exited some territories to focus on the UK and US, where we see significant growth potential. In the US, our focus on high-value clinical skincare differentiates us from competitors like Ulta and Sephora. (Unidentified_3)