The Hut Group raises forecasts after strong trading period

Manchester-based online retailer The Hut Group has raised forecasts for the fourth quarter and its 2020 fiscal year, following a strong October and November trading period.

The group, which completed the UK’s biggest flotation since 2015 this September, said sales performance has been ahead of expectations across all divisions.

It has seen new customer acquisition trends further accelerate into the fourth quarter across all divisions, supported by very strong performances during Singles Day, Black Friday and Cyber Week.

New active customers in November totaled more than 1.7m (+74% YoY), with almost 900,000 new customers in Cyber Week alone.

In addition, both customer retention rates and average spend per customer have seen continuing positive trends, further underpinning a very strong performance during the most important trading period of the year.

These positive trends have been broad based across all brands and territories, resulting in the group now expecting a significant outperformance for both the fourth quarter and the fiscal year 2020, versus previous guidance.

At the time of the third quarter trading update on October 26, the group guided to fiscal year 2020 revenue growth of +30% to +33%, compared with 2019 (FY 2020 revenue of £1.48bn to £1.52bn).

Following the continued acceleration in new customer numbers, and a very strong performance through peak trading, the group now expects FY 2020 revenue growth to be in the following ranges:

• Q4 revenue growth expected to be between +40% and +45% year-on-year (versus previous guidance of +16% to +25%)
• Revised Q4 growth expectations reflect a further acceleration from both the Q3 and H1 growth rates of +38.6% and +35.8% respectively
• FY 2020 revenue growth now expected to be between +38% and +40% year-on-year (versus previous guidance of +30% to +33%)
• FY 2020 revenue now expected to be between £1.57bn to £1.60bn

In line with the third quarter trading update, the group continues to expect stable adjusted EBITDA margins for 2020.

The group maintains medium-term guidance of annual revenue growth of +20% to +25% and stable adjusted EBITDA margins.

The fourth quarter trading update will be published on Tuesday, January 12, 2021.

Also, THG Ingenuity today announces a selection of new direct-to-consumer (D2C) partnerships across a range of verticals within THG Ingenuity Commerce.

In gaming, gaming giant Microsoft has launched its Rare merchandise website using THG Ingenuity, drawing on its capabilities to ensure rapid turnaround of print-on-demand merchandise such as branded clothing and accessories, in line with the release of new video games.

Licensing. The global entertainment company Warner Bros has agreed a D2C contract which includes wholesale and B2B trading rights, as well as enabling further digital growth across the UK, EU, US and APAC territories.

Meanwhile, the Pokémon Company International brand has agreed an international contract with THG Ingenuity across more than 20 European territories.

In retail, British clothing brand Jack Wills, part of Frasers Group, will be THG Ingenuity’s first project with the group, as part of a wider partnership agreement. THG Ingenuity will deliver a full end-to-end ecommerce solution for Jack Wills, including fulfilment and digital brand building. The deal covers the US, Australia and Asia-Pacific, allowing the British brand to expand its presence in key international territories.

The Coconut water company Vita Coco has partnered with THG Ingenuity to launch a UK D2C store, which will shortly be followed by sites in Germany and France as the brand grows its presence in Europe.

In the beauty sector, the natural and organic New Zealand skincare brand, Antipodes Skincare has launched a D2C website in the UK, as part of plans to expand its digital reach. The beauty brand also plans to launch D2C sites in North America and Europe via THG Ingenuity.

And the cosmetics brand Note Cosmetique has agreed a D2C partnership with THG Ingenuity to build a UK and US digital presence with potential for further global growth, following the brand’s plans to accelerate its digital transformation as a result of the COVID-19 pandemic. The end-to-end contract spans merchandising, trading, fulfilment, hosting, translations and brand development.

The Hut Group said it has undertaken significant infrastructure investments to mitigate any potential negative impacts of Brexit.

These include the opening in 2018 of an 800,000 sq ft manufacturing and distribution centre in Poland, from which the vast majority of the group’s European customers are serviced.

While the full extent of Brexit terms remain unknown, the group said it is well positioned ahead of the transition period ending to minimise any possible future disruption.