UK's THG first-half profit more than doubles, warns of Q3 tariff hit

• Adjusted core earnings jumped 109% to £42.8 million ($58.02 million) for the six months ending June, aided by price hikes to offset rising commodity costs
• New EU import duties (€3 flat charge per item after removal of €150 de minimis exemption) primarily impacted THG's beauty unit, with some revenue shifting to Q4 and next year
• Q3 revenue growth expected at only 2% due to EU tariffs and European heatwave affecting demand, but company maintains full-year outlook aligned with market consensus

Summary

Key Financial Results:

British e-commerce company THG PLC reported strong first-half 2024 results, with adjusted core earnings surging 109% to £42.8 million ($58.02 million) for the six months ended June 30. Growth was driven by strategic price increases to offset rising commodity costs and robust performance from its Myprotein nutrition brand.

Near-Term Challenges:

THG warned of significant Q3 revenue headwinds, projecting just 2% growth for the quarter due to two primary factors:

• New EU import duties: The removal of the €150 de minimis customs exemption, replaced with a flat €3 charge per item category in July, is impacting the company's beauty division
• European heatwave effects on consumer demand

The company expects these to be temporary issues, forecasting a recovery to 6-7% revenue growth in Q4, with some beauty revenues shifting to Q4 and 2025.

Company Portfolio:

THG operates multiple online retail brands including Lookfantastic and Cult Beauty in the beauty sector, alongside its flagship Myprotein nutrition brand.

Market Implications:

The EU's customs duty change, implemented to address perceived unfair competition from online retailers, poses a direct challenge to cross-border e-commerce operators. THG's outlook remains aligned with market consensus for the full year, suggesting management confidence in navigating these temporary headwinds.

Sector Context:

The company's experience highlights growing regulatory pressures on European e-commerce, particularly for businesses with significant cross-border operations.