Hut buys £275m Cult Beauty; ups guidance

Matthew Moulding, The Hut Group founder and CEO

Manchester-based online beauty and nutrition retail giant The Hut Group (THG) said on Wednesday that it agreed to buy online retailer Cult Beauty for £275 million.

The Hut Group, which joined the stock market last year, also raised its guidance on its sales growth for 2021 to between 38% and 41% — £2.18 billion to £2.23 billion — on a currency-adjusted basis, above its previous guidance of 30% to 35%.

“THG is acquiring Cult Beauty from private shareholders including majority investor Mark Quinn-Newall (co-founder of Net-a-Porter) and co-CEO Alexia Inge, for £275m on a cash and debt-free basis …” said THG.

“Cult Beauty is expected to contribute sales of c. £60m and adjusted EBITDA of c. £3m for the remainder of FY 2021 …

“Through delivery of planned synergies including re-platforming onto the THG Ingenuity platform, management anticipate adjusted EBITDA margins to increase and move in-line with group adjusted EBITDA margins within 18 to 24 months, and contribute sales of c. £140m and adjusted EBITDA of c. £10m in FY 2022. ”

The Hut Group CEO Matthew Moulding said: “Cult Beauty is frequently the partner of choice for emerging indie brands due to its personalised, content-led approach and enthusiastic consumer base who are continually seeking new, innovative solutions to complement their beauty routines.

“Cult Beauty’s first-to-market reputation makes the brand an exciting fit for our THG Beauty division.

“When retailing brands to consumers THG Beauty will run with two unique fascias within our main continents: THG will principally service customers within North America via our Dermstore and Lookfantastic brands, while in the UK, Europe, Asia and the Rest of the World the key brands will be Lookfantastic and Cult Beauty.

 “We anticipate fully migrating Cult Beauty onto the THG Ingenuity platform by the end of the year (within the first six months of acquisition), giving the brand access to the global digital features to underpin significant future growth.

“Further to the announcement made on 2nd February 2021, we are also pleased to confirm the Dermstore integration strategy remains on plan with the migration to Ingenuity already completed ahead of schedule.”

THG also said it is making “good progress” on its Ingenuity collaboration agreement with SB Management Limited, a subsidiary of Japanese venture capital giant SoftBank Group Corp.

As part of broader investment agreement with Softbank in May, THG said it would spin its technology arm THG Ingenuity into a separate company within the next 15 months.

After that SoftBank would then be able to exercise an option to invest $1.6 billion in THG Ingenuity for a 19.9% stake.

THG said on Wednesday that so far that the separation plan was ahead of schedule.

About the Author

Mark McSherry
Dalriada Media LLC sites are edited by veteran news journalist Mark McSherry, a former staff editor and reporter with Reuters, Bloomberg and major newspapers including the South China Morning Post, London's Sunday Times and The Scotsman. McSherry's journalism has also appeared in The Washington Post, The Guardian, The Independent, The New York Times, London's Evening Standard and Forbes. McSherry is also a professor of journalism and communication arts in universities and colleges in New York City. Scottish-born McSherry has an MBA from the University of Edinburgh and a Certificate in Global Affairs from New York University.