The Hut Group buys Perricone MD for $60m
The news just keeps coming from The Hut Group, the giant UK-based beauty retailer and technology company. On Wednesday, it announced that it had acquired Perricone MD, the popular US prestige skincare brand, for $60 million in cash.
Founded in 1997, Perricone MD is a science-led topical skincare brand and its acquisition feeds perfectly into THG’s brand ownership strategy.
“As the digital-strategic leader in the beauty market, the group is able to be extremely selective with acquisitions and it has acquired 100% of Perricone MD for a 1x continuing sales multiple,” it said.
Perricone MD is profitable at the EBITDA level, although THG anticipates that it won’t have a big impact on profits in year one.
But “as [it is] transitioned by THG Ingenuity into a digital-first and global brand”, it’s expected to be earnings accretive by the end of the financial year 2021, achieving double-digit EBITDA margins consistent with previous THG Beauty brand acquisitions.
It will now join a portfolio of own brands that includes Espa, Christophe Robin, Grow Gorgeous, Illamasqua, Mio Skincare, Mama Mio, Eyeko and Ameliorate.
THG founder and CEO Matthew Moulding said the brand “has a strong heritage, a loyal customer base and is a truly exciting addition to THG's beauty portfolio. The online beauty and skincare sector is growing rapidly, and this acquisition enables us to further strengthen our position as the world's leading pureplay speciality beauty brand owner and retailer.”
The company’s strategy is heavily focused on acquiring “industry-leading brands and intellectual property, typically constrained by store-based retail channels and limited geographic reach”. It then uses its THG Ingenuity Platform to help the brands “gain direct access to consumers across the globe, while directly controlling every element of the consumer experience and delivering materially accretive margins”.
The strategy has worked so far and currently, 50% of the revenues across its existing portfolio of seven beauty brands are generated from direct-to-consumer sales globally online.
THG and Perricone MD have a long history of working together as THG’s Lookfantastic has been selling it for some time. The new owner, which recently list on the London Stock Exchange, said that in the last 12 months, Perricone MD has seen “very significant sales growth on Lookfantastic, which has given further confidence in the acquisition rationale of the brand”.
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