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UK's THG warns on 2022 profit after major revenue miss

Signage is seen on a THG warehouse building in Manchester

By Paul Sandle

LONDON (Reuters) - Online retail platform THG warned on 2022 profit after revenue growth fell far short of its target, which it blamed on courier delivery disruption in December, delays in new contracts and the termination of some loss-making activity.

The British group, valued at more than 10 billion pounds ($12 billion) two years ago, said it was reviewing its activity outside its core units of THG Beauty, THG Nutrition and THG Ingenuity, its online platform that serves third-party brands.

THG downgraded its expectation for 2022 adjusted core earnings to 70-80 million pounds from its forecast of 100-130 million pounds in October, at which time it said demand for its health and beauty products was resilient.

It said on Tuesday, however, that its revenue grew 3.3%, or 4.1% excluding Russia, to 2.25 billion pounds in 2022, missing its 10-15% target. None of its three core units achieved double-digit growth.

THG provided the figures in a trading statement for the 12 months to end-December, ahead of full-year results which will be published in April.

It said its biggest division - Beauty, which owns e-commerce site Lookfantastic and prestige brands such as Espa - was hit by disruption in the United Kingdom's courier network in December, particularly hitting online gifting, it said.

It also invested in its prices through the year to support long-term customer retention.

Shares in THG, which have fallen 63% in 12 months, were trading down 11% at 61 pence in mid-morning trading, valuing the group at 780 million pounds.

Co-founder and Chief Executive Matthew Moulding said that after making about 100 million pounds of savings and seeing reductions in the cost of ingredients for its protein products, THG had momentum to improve its earnings margin in 2023.

"Core commodity prices used within our Nutrition division have seen significant deflation since their record highs in 2022, giving us confidence in significant profit progression as we move through the year ahead, against a much reduced group cost base," he said.

($1 = 0.8187 pounds)

(Editing by Kate Holton and Sharon Singleton)