Hut Group buys Lookfantastic for £19.4m
FAST-growing ecommerce firm The Hut Group has completed its biggest deal to date following its purchase of Brighton-based health and beauty retailer Lookfantastic Group for £19.4m.
The Northwich-based company has bought Lookfantastic from the founding Crown family, who started the business as a chain of hair salons but have since transformed it into the leading online health and beauty retailer in the country.
The Hut Group acquisitions director Steve Whitehead told TheBusinessDesk.com that the deal would bring the Hut’s own turnover to “well north” of £100m, as well as boosting its margins.
In the year to March 31, Lookfantastic Group made a pre-tax profit of £2.4m on sales of £20m.
The Hut Group’s earnings before interest, tax, depreciation and amortisation in the year to December 31 were £1.5m on turnover of £52m but Whitehead said that it had continued to achieve strong organic growth since – alongside the acquisition of the gadget retail site iwoot.com from Yorkshire-based Findel in August.
The deal has been financed by a new injection of £18.5m from The Hut Group’s existing shareholders including Balderton Capital, Artemis, William Currie Group & ex-Matalan CEO Angus Monro. It brings the total invested in the company by shareholders since April to £32.5m.
“There aren’t a lot of other companies that have done that – either on or off the market,” said Whitehead.
Whitehead added that the new equity funding meant the firm still hadn’t drawn down any of its bank borrowings, leaving it free to pursue other deals.
“It leaves us with plenty of cash on the balance sheet,” he said. “The strategy will be to continue making acquisitions in related online ventures in areas such as fashion, sportswear, health and beauty and gifting sites.
The vendors include members of the Crown family as well as business partners Keith Conniford and Martin Hurst. They have accepted a mix of cash and equity in The Hut Group as consideration. Lookfantastic Group CEO Daniel Crown will also join The Hut Group’s board of to help with its expansion into luxury goods.
Around £19m of Lookfantastic Group’s sites are generated from its online operations, which include lookfantastic.com, lookmantastic.com & beautysleuth.co.uk.
However, the business still has a number of salons in the South East as well as a health and beauty training centre. These will be retained by the company, as some suppliers in the sector are unwilling to supply online-only ventures.
The Hut Group founder Matthew Moulding said: “We are delighted to have entered into a partnership with the Lookfantastic team. After reviewing the health & beauty industry earlier this year, we identified Lookfantastic as the market leader.
“After meeting both management & shareholders, it soon became very clear that Lookfantastic is a great business with a strong culture fit with The Hut Group. The strength of the existing team is a key win for The Hut Group, as we look to build experience and capability in new categories and become a key player in the luxury goods market.”
Crown, who is the son of the founding husband-and-wife team but the leader of its online business, said: “Prior to holding discussions with The Hut Group, we had been considering investment in our company to accelerate our growth and consolidate our position as the UK’s leading hair & beauty website.
“When we spoke to The Hut, we immediately recognised they were the right partner for the next stage of Lookfantastic’s growth. The Hut has an industry leading IT platform, in excess of 40 multi-category websites and a combined database of 6 million customers, making the group one of the largest online players in Europe.”
The Hut Group was advised by PricewaterhouseCoopers, HBJ Gateley Wareing, Altium and Savills. Grant Thornton and Rawlinson Butler advised Lookfantastic Group. Internally, the acquisition was overseen by The Hut Group’s new legal director James Pochin, who joined the firm following the collapse of Halliwells earlier this year.
