The Directors believe that through Lookfantastic and its family of related websites, THG is the number one online pure-play specialist beauty retailer based on revenue. Offering over 850 premium brands, including Tom Ford, Laura Mercier, Estee Lauder, Jo Malone, Anastasia Beverly Hills and Natasha Denona, THG Beauty Retail’s revenue has grown at a CAGR of over 40 per cent. from 2010, when Lookfantastic was acquired, to 2019.
The principal driver of this growth has been the THG Ingenuity platform, which has enabled THG to gain international market share and create international demand for brands that had been previously largely sold in their country of origin. As a consequence, Lookfantastic represents a critical route to market for beauty brands seeking to grow, innovate and connect with global audiences. Approximately 64 per cent. of Lookfantastic sales in 2019 were outside the UK, reflecting the success of the THG Ingenuity platform in internationalising THG’s portfolio of over 850 beauty brands. THG is also building a disruptive portfolio of digitally native beauty brands through acquisition, with seven owned brands currently in the portfolio. THG has a strategy of internationalising and driving online D2C growth of acquired brands, both through brand D2C websites (e.g. Espaskincare.com) and THG retail websites (e.g. Lookfantastic.com). As a consequence, the majority of the Group’s sales are online, and non-UK.
A CRITICAL ROUTE TO MARKET FOR OVER 850 PREMIUM BRANDS
THG Beauty has a vertically integrated operating model, with in-house new product development and manufacturing delivered through the capabilities in the THG Ingenuity business, primarily through Acheson & Acheson, a BRC A grade and FDA registered UK-based business, which THG acquired in 2018. THG uses Acheson & Acheson’s best-in-class product development and innovation teams to oversee the future product development and brand positioning of all THG’s own beauty brands, combining this with data insights
from THG’s data platform to deliver highly targeted new product development across the brand portfolio. THG has also seen the benefit of margin enhancement through moving manufacturing in-house. Additionally, the acquisition of Acheson & Acheson has deepened THG’s relationships with third-party beauty brands, through being able to offer product development, product compliance, manufacturing, technology, retailing and fulfillment as part of a single operating model. THG expects to continue to invest in beauty product development and manufacturing.
THG also owns Glossybox, an international beauty subscription box business. Together, the Glossybox and Lookfantastic beauty box businesses had over 445,000 monthly subscribers as of July 2020. This active and engaged subscriber base provides THG with data insights that can be leveraged by THG and its brand partners for future brand development. In addition, it positions THG as a source of digital beauty education and product discovery for consumers, and also acts as a highly effective customer acquisition channel for THG Beauty retail websites, converting high-spending sampling customers (those who pay for premium subscription boxes) into Lookfantastic customers. For brand owners, Glossybox represents an increasingly important engagement channel, enabling their products to reach beauty consumers who are switching away from traditional forms of retail and media.