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Summary
- The Hut Group completed the takeover of Cult Beauty, a pure-play online beauty retailer for £275 million.
- The acquisition of Cult Beauty takes THG’s acquisition spree to over £854 million since its IPO in September 2020.
- Cult Beauty owners are expected to cash in £70 million post acquisition.
UK-based fashion, beauty and wellness company The Hut Group (LON:THG) completed the takeover of Cult Beauty, a pure-play online beauty retailer, for £275 million. The acquisition of Cult Beauty brought THG’s acquisition spree to over £854 million since its IPO debut. In the early session, THG shares were down 0.68 per cent to GBX 582.50 as of 8:08 AM.
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Cult Beauty was founded in 2008 by Jessica DeLuca and Alexia Inge and was acquired by THG due to growing interest in online shopping, particularly during the pandemic. Cult Beauty sells over 300 haircare, skincare, and cosmetics brands, such as Huda Beauty, Charlotte Tilbury, Molton Brown, Living Proof, and Drunk Elephant.
Cult Beauty employs around 300 people and has benefited from the growing popularity of many independent beauty and cosmetics brands on social media platforms. The company’s sales grew by almost 38% to over £123 million in the year to the end of May 2020, due to a robust increase in new customers during the first lockdown last year.
Payout details
Cult Beauty owners are expected to cash in £70 million post its acquisition by the fast-growing e-commerce firm The Hut Group. Cult Beauty shareholders, including Net-a- Porter founder Mark Quinn-Newall’s Neurotribes investment fund and Murray Salmon, a backer of Net-a-Porter, were given a £1.6 million dividend in August 2020 as pre-tax profits surged to £6.4 million, about 2.5 times more than 2019 figures.
Why did THG choose Cult Beauty?
As per to THG’s CEO and chairman, Matthew Moulding, Cult Beauty’s first-to-market approach makes the brand a perfect match for THG’s beauty portfolio. Cult Beauty was a popular choice for emerging local brands due to its personalised and content-led approach. Further, more than 60% of the Cult Beauty brands were currently not listed on THG’s existing beauty e-commerce platforms. Thus, the acquisition would make Cult Beauty one of THG’s main beauty platforms in the UK, Asia and Europe alongside Lookfantastic.
THG also announced plans to switch Cult Beauty to its main operating system over the next six months. The move would enable THG’s annual sales to reach £140 million and profits £10 million by next year. THG also announced that the current management team would continue to serve while Alexia Inge will be the ambassador for the site and be engaged in content creation.
The takeover deal came just a few months after THG secured £1.15 billion ($1.6 billion) in equity from the Tokyo-based tech giant SoftBank, to fund expansion of its technology platform after debuting on the London Stock Exchange in September 2020. THG was valued at over £5 billion in a massive stock market float last year and currently operates over 100 international direct-to-consumer lifestyle, fashion, health and beauty e-commerce websites.
THG’s other recent acquisitions
THG, which started as an online retailer of CDs, has been actively engaged in expanding its portfolio by acquiring several online brands. It is currently selling vitamins, nutrition, and beauty products and licenses out its payment technology. The company acquired the US online skincare retailer Dermstore.com in 2020 for $350 million, the US-based upmarket beauty products developer Bentley Laboratories for $255 million and operates Zavvi and Lookfantastic e-commerce sites.
