The Hut Group (THG) has acquired US pure-play online retailer Dermstore.com from Target for USD 350 million. The UK-based e-commerce company, which recently purchased US prestige skincare brand Perricone MD, for USD 60 million in cash, thus accelerates the growth of its beauty business in the U.S.
Increased US reach
Founded in 1999, Dermstore.com is a leading online retailer for prestige skincare and specialty beauty brands in the U.S. Target has chosen to sell the asset after having inked a partnership agreement with Ulta Beauty.
Antitrust clearance is expected to be received in late January 2021. Dermstore is therefore expected to contribute for 11 months of THG’s 2021 financial year, adding sales of approximately USD 180 million (about GBP 135 million) and adjusted EBITDA of approximately USD 4 million (about GBP 3 million).
Key digital beauty partner
THG’s ambition is to become a key global digital partner across the beauty industry, powering channel shift from offline to online. The group intends to achieve this goal through the expansion of Lookfantastic.com to become the global leader in online multi-brand distribution, and by helping global beauty brands in addressing channel shift of marketing spend from offline to online, via its beauty box business (Glossybox.com and Lookfantastic.com), but also by developing sales of its own beauty brands (Perricone MD, ESPA, Christophe Robin, Grow Gorgeous, Illamasqua, Eyeko, Mio Skincare and Ameliorate).
The deal was fueled by the USD 2.6 billion THG raised in its September IPO.
"A key driver behind the decision to list THG on the London Stock Exchange just over three months ago was to enable the Group to make major global investments, such as Dermstore.com. Accessing capital through a London listing has enabled us to accelerate our growth plans and build out a global leadership position within the exciting beauty industry," said Matthew Moulding, Chairman and CEO of THG.