Good morning, everybody, and thank you for joining us this morning, for our interim results. We're going to do things slightly different today than the previous presentations that we've done. We've kept away from doing a walkthrough on a video of our presentation. Instead, what we've done, we've put the presentation online early, along with a detailed RNS, and then with a lot going on in the group at the moment, we think that a lengthier Q&A section will probably provide more value, for everybody. In terms of the H1 itself, I think what I would say is it's been a solid half, in general, but the makeup of that half has been somewhat a bit different than the, you know, maybe we would have anticipated six to 12 months ago.
Following the business model changes that we've made through 2022 and 2023, the Beauty and Ingenuity divisions have delivered record performances, so we're really pleased with the progress that we've made through those business model changes, and we see good momentum there as well coming into the second half and thereafterwards, so that's been a particularly pleasing performance. We've also got more contract wins with great positivity feeding through in terms of the Ingenuity progress, so again, that's been solid. We faced some headwinds in the Nutrition division. Probably the biggest factor that you'll note in there has been through FX. We've taken in excess of GBP 5 million worth of profit hit from FX, principally around the Asia and the well-documented volatility in the Japanese yen.
I think one of the things to note from there is whilst that volatility is still there today, as we look forward to 2025, it's probably the first time now for a few years that we've been able to look forward to 2025 or the year ahead with some form of positivity around the FX there. So we're pleased with the direction of travel there, but that has been a frustration for us. One of the things that we've been able to do to handle that FX is we've launched our own manufacturing, so in the sense of being able to manufacture within territory. So that will steadily now start to be able to scale, and that does reduce our reliance on an impact from FX volatility in the region.
It's certainly done that across Europe and the US and other territories where we've done that through the years, and that's why we don't particularly ever note any volatility in those regions. I think the other area to really bring to everyone's attention is obviously the rebrand. It's been a major rebrand, probably the most, well, certainly the most complex brand rebrand we've ever done. The last time we did a rebrand for Myprotein was in 2018. To give you some idea of the complexity, you're probably looking at thousands and thousands of product lines across different countries in the world, in different distribution centers, which compared back to 2018, would have been a fraction of that, and so this has really stepped up the complexity.
When you do a rebrand, obviously, what we've chosen to do is we've chosen to limit that disruption to our online business, and if you look at the growth that we're seeing in the offline piece of the nutrition business, that's been particularly strong, minimal disruption there, and our average selling prices going into the offline market are actually in growth. But as we have pushed through the brand changes, we've done that, allowing our own customers to be able to partake in the discounts that you have to put in place to be able to drive through those product changes.
Now, as a result, if you were to look back at 2018, at the last rebrand, we took our growth backwards from 24%, I think it was, in 2017, down to 6% in 2018, when we took that rebrand on. And then as we moved forward into 2019, that growth then re-accelerated to 20%. Before then, we had the explosive growth that you would have seen through the COVID period, et cetera. So the key thing that pulls back that growth when we did that rebrand in 2018 is the average selling prices as you implement discounts across the websites to transition the brand from old to new.
That's very similar to what you've seen in this year and in the first half of this year, where average selling prices across the websites have been down around, on a constant currency basis, around 12%, and that's pulled back the revenue in that Nutrition division to about 7.5%, I think it is, that we've reported for half one. What I'm pleased to say is obviously that rebrand is now largely behind us. We started that rebrand in September last year, so we start to comp those numbers. Actually, for September this year, as we've stated in the RNS, we're expecting a return to growth for Myprotein, which, given the extent of changes we've put that business through, you know, that's been somewhat of a relief, I don't mind saying that.
You know, the summer itself, it never seemed like it was ever-ending, but finally, it feels like we've come through with the progress there. I think in terms of the output from the rebrand, just to remind people why we've done this, you know, we've done this to be able to attack a significantly bigger offline market, which we've never really addressed in the past. And through the listings that you've seen, of the brand and some of the licensing deals we've done most recently, the Müller and Myprotein partnership together, you can see some real success there. And you're seeing, you know, really, really strong growth. So, you know, in half one, I think the number would be in excess of 40% growth in our online retail sales.
We're seeing great success, and that strategy should pay off for us as we then start to grow that segment quite considerably. I think a few other things just to touch on from the H1, touching on the outlook. We've stated in there that we'd expect to be within consensus, albeit at the lower end of consensus. Just to remind people that we took a GBP 5 million plus FX hit just from in Asia with the Japanese yen in the first half, and that volatility still lingers for us for this year. Naturally, we'd expect that to be a key factor.
There's not a lot we can do with FX, particularly, other than localize, which is something we've been working on for the last couple of years, but hopefully, that will become a good tailwind for us next year, and then, you know, we can put all that behind us. I think other things to note, obviously, we're very aware that there's been a spike in the wheat pricing in the markets at the moment on the commodity side of things. We've got a good history of how to navigate that for those that have been involved or a stakeholder in THG through 2022.
You will see that we stood firm on providing and helping our customers, you know, with support through the cost of living crisis, and we, you know, really dug deep in there. And then, the following year, we delivered record profitability ever in the nutrition division as that was rewarded. So we've got a good plan of attack in terms of how we do that, and we'll respond in the market, depending on how that volatility sits. But we don't expect that to be a long-term volatility in any event. Obviously worth noting that. I think the other things to note is obviously around things like the balance sheet. So you'll see an increase in the net debt at the half year, which is transitory. A few items in there.
You know, the underlying free cash generation, the business is actually stronger than the prior year. In the prior year, we had some freehold disposals of GBP 55 million. And then also in this last 12 months, we've made GBP 20 million worth of acquisitions. All of that said, what we're expecting is, well, we had some VAT balances that are set to unwind by the end of this quarter, which is material, and that comes back our way. Also, the mix in our creditors, where nutrition creditors are worth, you know, double the creditor days. So from a working cap perspective, as you pull back from your nutrition division, you'll see, you know, less working capital benefit temporarily. Now, as we return to growth, that reverses, so that's quite a material point.
And then, I think the final point I would say is naturally, the CapEx is continually reducing, so I would expect to see, you know, materially lower CapEx in the second half and also through to next year. So lots of positives for us there in terms of, in terms of the outlook, in terms of that performance, but, you know, you know, clearly, there's plenty of work to do for us to make sure we're on a really strong footing for 2025. I think some other things that we've got in the, in the update today, which be obviously of key interest to people, we have the step-up that, you know, we've been waiting for the FCA to finalize, the rules and the, the guidance there.
So that's now there, and clearly, we'll be making the step-up in due course. And, you know, if there's any Q&A on that, I'm sure Damian can help with that. And then, at the same time, we've outlined our work that we're doing on the Ingenuity demerger. So I'd expect naturally quite a few questions, and I know the team have been speaking with the analysts this morning, and running them through that. I think, look, taking a step back, we have three very sizable businesses, two of which are very cash generative, highly profitable businesses. And then, we have the Ingenuity business, which is an infrastructure play, where we invest our surplus cash into Ingenuity to build an asset for the future.
Maybe something you might see similar to when Sky was building out its network and Sky dishes across or many other infrastructure players that people would know about. You know, what's clear for us is that in an environment of high interest rates, that you know, cash generative businesses are valued, you know, quite different than businesses that are doing an infrastructure play. We've had extensive discussions now with shareholders over the past year, and you know, what is clear is, I think we're all aligned that you know, having an infrastructure business as part of the group is probably, as a listed business, something that you know, shareholders would prefer to see more value in other uses of capital than building that asset.
Obviously, we are super passionate about that asset and see incredible value and opportunity with it. So that's something that we've been exploring in great detail. We've obviously done a lot of work over the summer on this project and before. We've now received all the necessary tax clearances from HMRC to be able to go forward and do this. We obviously did extensive separation work across the group throughout 2021 and 2022 on a GBP 8 million project to basically rewire the group's operating system so they can operate independently. That's all been successfully done. You know, that's something that the board and stakeholders are looking at in terms of the right steps in which we should look at potentially doing that demerger. So...
I think, you know, it's safe to say there'll obviously be quite a bit of questions, so rather than me just keep going on around any of those points and trying to guess what the Q&A is, we'll probably leave that for the next section. But just to give everyone a few moments to make any notes and come back with any further thoughts. What we've now got is a brief business video, just touching on some of those points from H1, touching on the rebrand and things like that, and then we'll move into Q&A and go in much more detail.
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Thank you. Ladies and gentlemen, if you'd like to ask an audio question, please press star one on your telephone keypad. So that is star one if you wish to ask a question. Today's first question is coming from Wayne Brown, calling from Liberum. Please go ahead.
Morning, gents. A lot to get through, so I'll keep my questions brief. I think I've got three, maybe four, if I may be a bit bold. On nutrition, I know that the rebranding from an operational perspective and the product looks great, et cetera. But clearly, if you can just run through what's gone slightly wrong with the guidance that was given. Is it the fact that there were elements of the actual rebranding and getting through the old product that didn't go according to plan, or just explain where the disconnect happened on that front?
And then if I may take them, maybe all up front, and then on Japanese yen, that has moved 10%, I think, in the last three months, positively. So just curious if the impact of that is gonna be seen in H2 this year or next year? And I don't want to sound glum or negative, but could the timing of opening the facility then just be the wrong timing, and how should we be thinking about that in the numbers? And then on Ingenuity and separating that out, I think that's clearly, you know, as our view, very interesting and exciting, and should get people focused on some of the parts in due course. But just curious on two fronts on that.
What could happen if the split does not happen? What are the risks in this actually not occurring? And then maybe if you could just speak about the cash extraction, what that could look like in the RemainCo, if you could ring-fence and fund Ingenuity. Thank you.
So, Wayne, I'll tell you, this will probably be useful for everybody, really. Maybe the best thing we could do is actually just go one question at a time. So, ask as many as you want, but 'cause I'll forget them all. But I think the first question there, sorry, Wayne, was the one around what's potentially gone wrong with the rebrand on the Myprotein business? I mean, look, I think you do a rebrand when your momentum's good, right? That's got to be the golden rule. Now, you wouldn't ever go into a major overhaul rebrand into headwinds. So to wind back to when we took the decision to do, you know, these things take an awful lot of planning and an awful lot of work.
So to get to this point of a rebrand, probably behind the scenes, there's been eighteen months' worth of work going on to get to that position. And then you make the decision, and then you go, and you got to order all your product in, and you start to do all your campaigns. So once you make that decision and you go. So we did that in September, is when products started to feed through onto the website. So that decision would have been taken much earlier in the year as we start to do that. Now, you know, the momentum, you'll recall, for Myprotein last year was really strong.
Record profitability, you know, incredible performance, probably generated, you know, GBP 90 million thereabout of profitability with, you know, free cash flow, you know, of that and some potentially, you know, getting into the detail. You make that decision then when you, when you've got the right momentum, that would always be the right time to do the rebrand. Now, the kind of things that have changed since then, obviously, has been that, you know, the wider market has been a bit more challenging through the currency movements. You wouldn't have wanted to lean into that. There's been a secondary bounce in some of the commodity pricing, you know, whether that's a dead cat bounce or whatever, you know, you've seen some of that.
You've got those kind of factors that feed into it. What will always be the case is you're sat there with over GBP 100 million worth of stock, let's say, when you go into a rebrand. You're not... Some of that will be in raw materials, most of it will be in finished goods. What you're not going to do is sensibly go out and job that stock out to then start again with new brand. Also, it will be almost impossible to do 'cause you've so many product lines, et cetera. You've got to decide on your channel in which you're going to manage that.
So we've managed that through directly to our customers, and that then means that your website looks messy because you've got—you're basically like walking into a car showroom and having an old Audi model alongside new Audi models, and it never gives the best feel and experience, et cetera, and it's quite difficult for the marketeers in terms of how they're doing their channels. And so you make that decision, that's always going to affect your average selling prices, as it did in 2018. But doing that, leaning into the FX market, where you've got that hit in the, you know, out there with that, you know, that's explosive volatility.
If you, you know, I think anyone who puts up the GBP to the Japanese yen graph now, you'll just see how horrendous that has been through, you know, the first half, but not just the first half now, this has been for three years, four years in the making. Every year it's been getting worse. And we all know the reasons, for those that follow currencies, know the reasons as to why they look to be unwinding now. Which then kind of leads on, I think, Wayne, to another point that you said is, have you done this too late now in terms of your localized sourcing? Localized sourcing can never be too late. Now, what we've not done in this territory is we've not gone and spent a lot of CapEx building our own manufacturing unit.
Shoring the places like the US and huge facility in Europe, huge in the UK, et cetera, we've done that. But as our first entry point into anything ever, we do it through third parties, and so we've done it in India, and we've now done it in Japan. We've got, you know, a third party that we, you know, the big players out there, and they help us do the manufacturing and so on and so forth. And it's nascent, and it starts to grow, and that's how you handle it. So it's not too little too late for that. And actually, you know, we'll be sat there punching the sky once that currency continues to come back, as you've seen the 10% movement we've seen of late.
That, you know, this time last year, though, you know, it, it's broadly flat right now, but there was a big dip that happened as well, and then it went back up. So what we sat there knowing is all things being equal, this is a really nice tailwind for us, for next year. I think the other questions that you had on there, there was the Ingenuity stuff. What else did I miss on the rebrand? Was there something else there, Wayne?
No, no, no, I think. No, you didn't miss anything. You answered that well. I think just the last question in two parts was on the Ingenuity, why could the split not happen? So what risks are there that we should think about? And then just look at the cash attractions.
Sure
... that would remain and remain current-
Sure
... if you ring-fence and fund Ingenuity separately.
Yeah, sure. Look, the cash attraction point kind of follows on to the next point, which is, you know, both of those businesses are highly cash generative with minimal CapEx. So as a result, you can sit there and that we, you know, our stakeholders, ourselves now having got four or five years' experience of the markets, you know, we recognize that that's a very attractive for being listed, to have those assets generating that cash and being able to do dividends and share buybacks, et cetera, instead of diverting those funds into technology and infrastructure, which then, you know, build a new business model. And so I think those cash attractions are really clear.
Obviously, if you, I mean, if you were to take a step back, you know, the rough math would have been, free cash flow of the RemainCo would have probably been somewhere in the order of GBP 80 million plus in the prior year, in 2023, versus for those that follow the detail of our numbers, I think we had a free cash flow of about minus 13. So what that then means is, well, Ingenuity was about minus 97, 90s, you know, something like that, so to give you that minus 13. So you're putting that money into Ingenuity to build that asset. So if you'd have had that, if you then take a step back and say: "How are those businesses performing?" Well, in 2023, we had Nutrition performing and Beauty and Ingenuity undergoing their business model changes.
So if you were to think, well, Nutrition should be firing for next year, and there's no reason why we'd expect Beauty not to be firing, then the core RemainCo business should be performing incredibly well, which means that you've got a very cash-generative business, because for the past three years, there's always been something in one of the divisions that we've been overhauling. So as a result then, the attractiveness is pretty clear for all to be there and what that could then mean for the market, and you've got two very strong standout assets that people can start to focus on. You know, then what you've got is Ingenuity, you're probably not far off as a standalone business, $1 billion of revenue.
In a profitable business, at EBITDA level, but with significant depreciation charges and various other things, which I know is not in a high interest environment, not the most ideal scenario to be in, because you get these huge depreciation charges, and you end up with big reported losses and things like that. Taking that away, having a billion-dollar type revenue business, you know, strong positive EBITDA growth, great trajectory, but requiring cash investment to do that, that is something that, you know, having spoken to our stakeholders, we've got a strong view that actually there's a lot of support for that as a standalone business. It's actually the combination that's posing the biggest challenge. Look, we can never say with certainty that anything's going to happen, right?
That, that's for sure. Otherwise, we'd be announcing categorically, we've done it today. What I can say is that's a very strong level of feedback we've had from our stakeholders, from internally, from us running the business, and our passion for Ingenuity is better today than it's ever been, reflected in more contract wins, et cetera. We just want to make sure each of our divisions, as we announced in 2021, have got the right platform in which to be able to do their, you know, to go on and fulfill their potential.
Okay, thank you very much. Just, and any views on as to why this demerger might not take place, or is that getting into territory that you're not comfortable in discussing?
Look, Wayne, I can't really get into too much on that. But what I would say is, look, we obviously, if just to take a step back, if Ingenuity is not in THG as a very large-scale business, probably got about 4,000 staff in that business, with that $1 billion of revenue and strong EBITDA performance, it's fair to say, as it can have its own banking and funding and finance facilities of quite a substantial scale. And then on top of that, you know, it's obviously an attractive asset in that sector, you know, to some considerable degree. So it's not like we're exiting something in any way, shape, or form. This is all really going to be around making sure that our current stakeholders can partake. That's an important point.
What one thing that's probably, you know, isn't entirely clear is we won't be forcing anybody to not be part of Ingenuity should we go down this route. This is something that all stakeholders will be able to partake in, and because it's, you know, it's got its ability to be able to go on its own way and to do that very successfully. So look, there's no reason logically as to why, you know, something would stand in the way of this. We know that from a stakeholder perspective, that there'd be support there for it. We know that it can stand alone on its own feet with a good banking package behind it, et cetera. But until these things ever happen, there's always a risk.
Great. Thank you very much. That's very clear. Cheers.
Thank you. Our next question today will be coming from Monique Pollard of Citi. Please go ahead.
Hi. Morning, everyone. Three questions from me as well, if I can, please. The first question is just on the guidance, so the EBITDA guidance. We're talking about the low end of the range, and it seems to me that to get to that low end of the range, you need about a 12% adjusted EBITDA margin for nutrition in the second half of the year. I'm just wondering if that's the right way to think about it and whether that's reasonable, just given the commentary that sort of, you know, it's in September now, that we're sort of exiting and getting back to growth in that nutrition segment.
Yeah, sure. So look, I think the other points to put into account into that as well has got to be how the other businesses are performing as well. Sure, I think just on a straight line basis, the 12% is probably the accurate basis in which to look at it. And, you know, in the offline business, we deliver that and more. What I wouldn't rule out as well is, you know, some of the strong performances we might see in other parts.
You know, I think it's fair to say that both Ingenuity and Beauty have outperformed in the first half beyond anyone's expectations externally, and there's no reason why we, you know, that could not, you know, might not be the case as well for the second half. I mean, look, like trading is ahead, so can't be certain with anything. And we also, quite rightly, will react to however the market is, because we do, I know, much to the frustrations of many people. We always take long-term decision making, and you know, we're passionate about that. So, you know, when there are these moments of volatility, we'll go away, and we'll figure out what's the right thing for the business.
If that meant that if we didn't deliver 12% in nutrition for that period, then we would do that and for the right reasons. Now, we would hope that there are positives elsewhere in the group that would offset that. I mean, as an example, though, there are things that provide us with various tailwinds into the second half. You know, products that Myprotein hasn't been able to have on site because of the rebrand, even basic things like the Advent calendar wasn't there last year, and that's going to be launched any day. You know, these are nicer creative things. In terms of the beauty side of things, sure, you know...
It’s been a tougher half one for nutrition, but with beauty, we’ve now come into the half two, launched the Advent calendars, and that’s a big revenue driver for that division. And those have gone incredibly well as we’ve come into the second half, and we’d expect to sell out of those very, very soon. And so there are aspects everywhere, but I think those math are broadly correct, Monique, in terms of what you’ve said. And equally, though, you know, we wouldn’t hesitate on taking the right decisions, and if that meant that we don’t do 12% in that division, we won’t do it, right?
What that will mean, as we've proved in previous years, is that nutrition will have an even stronger period next year because we'll have done the right things for that business.
Understood. Thank you. The second question I had was just on beauty. Was wondering if you could give us any sense of the trends that you've seen across the different segments. So, you know, your two biggest segments, skincare and haircare, but also the smaller segments, the fragrance and cosmetics. And if you could call out anything that had led to that sort of deceleration that we saw in the beauty performance in the second quarter versus the first quarter, please.
Yeah, sure. So I think just to talk about the various categories, if you take Olaplex out of the haircare sector, actually, that's really strong. But Olaplex has been, you may recall, had a really strong couple of years and then, you know, have suffered a few knockbacks, and so those guys have faded away a bit. But the rest of that category is really strong. Skincare remains really solid for ourselves as well. I think fragrance continues to get stronger and stronger for us. And even in cosmetics, you know, cosmetics is, especially for Cult Beauty, going incredibly well. So I think it's fair to say that as a sector, it's alive and kicking and going, and going really well.
We've put fragrance into one of the Advent calendars. So for Cult Beauty, it has two Advent calendars. They look very similar, but one's got fragrance in, which is a hazmat product, so can't go on planes. So only the UK got to choose that this year, so you could choose between that and a different, you know, one that didn't have the fragrance in. The fragrance Advent calendar sold out within the first week, which is like just wild and ridiculous really. The other one's about to sell out as well. So just, but there was limited volumes, obviously, that we put in place. So that gives you an idea of how that market is shifting.
I think premium beauty is doing incredibly well, and I'd be surprised if the wider beauty market isn't similarly doing very well. I think in terms of you know, why did you know Q2 maybe be a little bit slower than than Q1 for beauty? It's really just in the runnings, you know, there's a lot that we're doing around profitability focus, and so, you know, you'll have seen a stronger second quarter profitability for beauty than the first quarter. If you recall some of those business model changes, we've pulled back from servicing less profitable customers and orders that are further away from DC centers. So that was a lot of the change that we put through the business. We remain very focused on continuing to do that, irrespective of how that might affect the top line.
But I think what you'll see is, you know, especially in, you know, so far the start to peak for beauty has been strong. I don't think there's any getting away from the fact that there's been channel shift going the other way since COVID. When the channel shifted online, I think the high street has seen some significant wins going the other way since the reopening after COVID, that online players have had to battle with. My guess would be that that channel shift is starting to move back the other way now, and maybe that's starting to be evidenced a bit as well. There's nothing in that Q2 slightly softer top line that would have been supported by a much stronger bottom line that came through there.
That's very clear. Thank you. And then the final question was just whether you were able to quantify in any way the potential positive buying flows from the transfer to equity share category, on the stock exchange?
Hi, Monique. A few different numbers from different bankers, but isn't it always thus? But probably 60, you know, 60 million plus, if you look at the, you know, the direct index funds and then those that will shadow or track those index funds. So that's 60 million shares, you know, with an estimated caveat to that number.
Understood. Thank you very much.
Thank you for your questions, ma'am. Our next question today will be coming from Charlie Rothbarth of HSBC. Please go ahead.
Good morning, everyone. Thank you for taking the call. I just wanted to ask you a quick question. I appreciate you haven't given the granular detail in the release, but what would make up the balance sheet for Ingenuity, and what would have to sit there from the main co to support it?
So there's kind of like a, obviously, we're well advised on this in terms of the process and the like. There would be a circular that we would distribute, which has got the full breakdown of the different balance sheets and how that would look. So there's not really a great detail that we can provide ahead of that. It'd be remiss of us to do that. Instead, what we can do is point to sort of the cash positions of each business area. Now, what I can say is, on our-...
First estimates of EBITDA ahead of a circular. It's probably safe to assume, for and this is public information, as I'm told as well within quite a few analyst reports, but we'd anticipate about GBP 150 million worth of cash outflow in Ingenuity to the point at which it turns free cash flow positive, which is about three years out, which is dramatically down from the investments which have gone into it. As I talked before, I think in 2023, in the nineties of cash investment, that's the cash outflow, free cash flow that it used up. If you think from the first of January, it's probably, you know, three years, GBP 150 million of outflow.
So that's probably the most pertinent number, I think, to be able to give to you. The actual breakdown of what the balance sheets say, of which assets and all the rest of it, would go into a circular, and then how we would fund that GBP 150 million, clearly, as a strong EBITDA business, there would be an element of a facility going into it, and then there'd be other funds that would go into it as well.
Perfect. That's really clear. Thank you very much indeed. Thank you, sir. We'll now move to John Stevenson of Peel Hunt. Please go ahead. Your line is open.
Hi, thanks this morning, guys. Yeah, another demerger question. I guess, are there any implications for the future service agreements and margin structures that are required to deliver the successful demerger relative to the current agreements that the businesses have got with Ingenuity at the moment? You know, essentially, I suppose, does the pricing structure need to change on an ongoing basis? And the second question, just on nutrition, obviously, you know, a raft of new agreements in place this year, both in terms of the retail partners and licensing income. Can you put a sort of number on the annualized GMV you'll have in place by the year end?
Sure. So on the Ingenuity service agreement, we already have one in place, actually, from the separation work that we did. It's a proper standalone arm's length, which has actually been through another review as part of its legal contractual terms. So there, there's not anticipated to be any differences, any changes to that other than the standard reviews that are in place. And so that work has all been done and pleased with that. So then coming on to the second question in terms of the various agreements we've got. So look, the GMV, we on the Müller agreement, for example, that only went live in a week ago, I think. So that's going to be some while before we get the GMV value from those kind of contracts kicking off.
You know, obviously, we'd expect that to take a decent part of the market share, which then hopefully gets to roll out into more international markets and so on and so forth, but we are expecting considerable success there. I think to where we were. I think I don't know if it was in the RNS, but if the sales for the H1 for nutrition were back 7.5%, from memory, it was about the GMV improvement, took you back to 6.4-
6.8.
Six point eight. There we are. So that gives you an idea there of that positive GMV. We obviously expect that to scale quite considerably from here on. But you know, what is certain is, again, we're in GMV growth in September all day long, and you know, I'd expect that for the rest of the year. So yeah, we are expecting the brand to you know, get further and further reach, and we've got other exciting partnerships in the pipeline as well.
Okay, brilliant. Actually, while I'm on the mic, can I ask just one more on beauty? Obviously, you know, margins are already back at 6%. And I guess when we look at the business, you know, retail media is only going to grow from here. The mix of prestige brands, I guess, only grows from here. So what, what's your view in terms of medium-term margins?
Look, I think it's definitely got the potential, right? One of the things we've done is quite an extensive cost-saving exercise throughout THG, you know, and getting that operating leverage to feed through is where the real next level of upside is. If we can get all of our divisions now working together. To take a step back, in 2021, all three divisions are firing. In 2022, all three are going through a business model overhaul, you know, reacting to the new world. In 2023, we have one of those businesses firing in nutrition, and then we have two now, and then hopefully for the third for next year, so all three.
Now, during, throughout that period, we have undergone extensive cost-saving exercises, and really, you know, to make sure that we can get that operating leverage to feed through. So it's not just a case of beauty, it'll be nutrition as well. When, you know, we saw that great operating leverage in nutrition last year, we expect that to be the norm and potentially better. Beauty, you know, hopefully with that operating leverage, too, that starts to feed through and give us that potential for to go on for another target level there afterwards. I wouldn't put a number on it today, but what I would say is, what's getting missed, I guess, quite easily in our numbers, is the success we've had in the fulfillment line.
I mean, the fulfillment line, if anyone that takes a look at it, all of that automation, the robots, we've actually got tomorrow, AutoStore are doing their investor day here, on our campus to showcase. But across all of our distribution and fulfillment job, that's got to have been the best performance from that team in any aspect of THG. The savings are incredible. Now, that actually delivers serious operating leverage because I think if you were just to look year on year, I haven't got the number in front of me, but I wouldn't be surprised if it's 150 basis points lower, on a, on a two billion GBP revenue business. That's, that's a, that's a cracking number. And then you keep, keep doing that.
They're the kind of things that if you keep eking more and more out of that line, that should feed through to the operating leverage of every division.
Brilliant. That's very clear. Thank you, man.
Thank you very much for your questions, Mr. Stevenson. Ladies and gentlemen, that will conclude today's question and answer session. I turn the call back over to Mr. Matthew Moulding for any additional or closing remarks. Thank you.
Okay, well, look, thank you, everybody. I think, in terms of that half one, that's, you know, I can speak on behalf of the team. It's been a pretty brutal exercise in putting the business through change and adapting, and I think, you know, I'd just like to say thank you to the wider team that have really put the effort and energy in. It's not been the easiest of periods in which to go and make all that happen, and I'm just delighted in, you know, various aspects of the progress that we've made, but also very much aware there's plenty for us to do for, you know, for the going forward as well, and for the rest of the year and into next year.
I'd also just like to thank all the stakeholders who've supported us in, you know, taking long-term views and making the changes to the business models as we see fit and choose to do. You know, our confidence is that we are going to be able to repay that with some outstanding numbers to come in the future, so thank you.