After months of speculation, Cult Beauty has a new owner. The Hut Group (THG) has agreed to buy UK-based online beauty retailer Cult Beauty in a £275 million ($382.91 million) deal.
WHO: Cult was founded in 2007 by Alexia Inge and Jessica Deluca out of their frustration with traditional brick-and-mortar stores. Today the UK-based online retailer is home to 300 of the beauty industry's hottest.
WHY: Adding Cult to its portfolio, which also includes brands such as Lookfantastic, will cement THG's status as leader in the prestige beauty category. The takeover being announced this week is also expected to benefit THG's e-commerce fulfilment division, Ingenuity, by enabling it to forge closer ties with many of the brands sold by Cult.
The brands Cult sells operate across skincare, haircare, and cosmetics, including Charlotte Tilbury, Drunk Elephant, and Huda Beauty. And there's little risk of cannibalizing THG's existing business as around two-thirds of the brands are not currently listed on existing THG Beauty sites, "representing an opportunity to broaden consumer choice globally." Due to its "distinguished brand portfolio," Cult Beauty will "retain a very clear identity within THG Beauty," the company said.
IN THEIR OWN WORDS: THG Executive Chairman and Chief Executive Matthew Moulding said, "Cult Beauty is frequently the partner of choice for emerging indie brands due to its personalized, content-led approach and enthusiastic consumer base who are continually seeking new, innovative solutions to complement their beauty routines.”
“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.”
- The Hut Group to buy UK-based online beauty retailer Cult Beauty in a £275 million ($382.91 million) deal from private shareholders, including co-CEO Alexia Inge and majority investor Mark Quinn-Newall, who had also cofounded Net-A-Porter.
- THG raised its guidance on its sales growth for 2021 to between 38% and 41% on a currency-adjusted basis, above its previous guidance of 30% to 35%.
- THG said Cult Beauty would add around £60 million in sales this year and £140 million of net sales to the broader business in 2022.
- The Cult Beauty branding and identity will remain intact and use the THG infrastructure to spearhead international expansion with less than half of its sales currently from outside the UK.
- THG earlier said its tech arm, THG Ingenuity, will be spun off into a separate company within the next 15 months. That also gives SoftBank an option to invest $1.6 billion in the spun-off unit for a 19.9% stake.
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