British retail giant THG has lowered its profit guidance despite reporting record annual sales.

Revenue came in at 2.25 million pounds in the year to December 31, up 3.3 percent from a year earlier and up 39.6 percent compared to two years ago. But that was still below target.

The company said the results were impacted by lengthier onboarding of higher revenue and margin Ingenuity partnerships; disruption in the UK courier network during December; and the group’s decision to discontinue a proportion of loss-making OnDemand sales.

The Manchester-based company said it expects FY22 EBITDA to come in at between 70 million pounds and 80 million pounds, down from the guidance it announced in October of between 100 million pounds and 130 million pounds.

Chief executive Matthew Moulding hailed the results in a year that “presented many challenges”.

“Amongst many highlights, I’m especially pleased with the progress of Ingenuity, successfully competing with major global technology giants to transform digital operations for global retailers and brands,” he said.

Strategic review

It comes after THG launched an internal reorganisation last year. The company also said Tuesday it is reviewing its loss-making categories and territories within the THG OnDemand division.

“With the completion of the divisional reorganisation, and around 100 million pounds of annual efficiency savings already delivered, the group enters 2023 with strong momentum to achieve substantial margin expansion,” Moulding said.

He continued: “Core commodity prices used within our Nutrition division have seen significant deflation since their record highs in 2022, giving us confidence in significant profit progression as we move through the year ahead, against a much reduced group cost base.

“We remain highly confident of delivering adjusted EBITDA margins in excess of 9 percent over the medium-term.”