THG faces supplier action over too much discounting - report
Beauty brands that sell via THG’s sites are opposing discounting plans by the online retail giant, according to a report. High-end Dermalogica is understood to be among a number of brands taking action to protect their pricing policies.
The Daily Telegraph claimed this includes restricting the flow of stock over concerns THG is too aggressively discounting to hit sales targets.
Dermalogica, owned by consumer goods giant Unilever, is among other big names, although the company and the others taking action have so far declined to comment.
An industry source at one beauty supplier told the newspaper: “Working with THG is not easy because of the high profit margins they need, but when they tear down your brand too it’s not worth it.”
THG owns a string of popular beauty websites, including Lookfantastic, Dermstore and Cultbeauty, which have grown rapidly with investment in digital marketing and social media promotion.
Its shares plunged to all-time low of 106.74p on Monday, down over 5% on Friday’s close, valuing the company at below £1.4bn. That compares with its float valuation of £5.4 billion and a peak of more than £8 billion.
Beauty is its core (47%) business, and accounts for more than half of sales. However, in September it revealed plans to spin off and list the arm.
A THG spokesman told the newspaper: “At Lookfantastic we are proud of our strong and close working partnerships we have across all of our supply base. We work together with our partners to ensure we have the best products available and provide great value for all of our customers.”
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