© 2024 Alpha Spread Limited. All Rights Reserved.
www.alphaspread.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on www.alphaspread.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. In no event shall Alpha Spread Limited be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on www.alphaspread.com, or relating to the use of, or inability to use, www.alphaspread.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance.
You don't have any saved screeners yet
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Good morning, everybody, and welcome to THG's fourth quarter trading update. I am Matthew Moulding, and with me today are a number of the senior management team, including John Gallemore, CFO; and Steve Whitehead, Group Commercial Director. I will run you through the headlines from today's announcement, and then we will open the line to questions. We are very pleased to be reporting record full year sales of GBP 2.2 billion, in line with guidance following continued strong growth in the final quarter. This is particularly pleasing considering the lockdown comparables from Q4 2020 and the wider challenging macro environment. On a constant currency basis, the 2-year growth rate was circa 95% for both the full year and during Q4. Even after adjusting for M&A contributions, we have scaled revenue and expanded our business model, particularly ingenuity, well ahead of expectations given at our IPO 16 months ago. At IPO, we guided the market to 2021 revenues of circa GBP 1.75 billion and are pleased to be reporting GBP 2.2 billion, including M&A, which is roughly around GBP 2 billion excluding M&A. And that growth has been broad-based with all our divisions once again delivering meaningful growth year-on-year. Notably, our ingenuity commerce proposition has delivered further significant growth in live sites during the year with significant client wins in the fourth quarter contributing from Q1 onwards. For the year as a whole, ingenuity commerce revenues grew by around 135%. 2021 was also a year of significant investment for the group as we further developed capacity within our global fulfillment network which dispatched, on average, 1 million units per day during the peak trading week. In the second half of the year, we moved into our U.K. technology campus, ICON, bringing together fulfillment, print on demand and personalization services and our content creation facility, THG Studios. We remain on track with our acquisition integration strategy, notably for Dermstore and Cult Beauty, which were both migrated to the Ingenuity platform ahead of schedule. During the year, we invested around GBP 1 billion in support of our strategic growth plans, adding 1 million square feet to our warehouse infrastructure building new functionality across our technology and also in strategic M&A. The group also created many new jobs during the year with 3,000 new colleagues joining the group both in the U.K. and internationally. At this point, I would like to say on behalf of the management team here with me today a huge thank you to our talented team across the globe for their outstanding efforts during Q4. Looking forward to this year, we have started the period well with strong momentum across our business areas in our core U.K. and international markets. As we have gathered further data from our global customer base, we are encouraged to see behavior and KPIs in line with the pre-pandemic environment. Notably, average order values and repeat purchase metrics alongside continued growth in new and active customers as well. The business continues to benefit from the tailwinds of an accelerated shift to e-commerce. And at this point in the year, we estimate 2022 revenue growth in the range of around 22% to 25%. Before I hand over to Q&A, I would like to thank our shareholders for their support during our first full year as a listed company. We are confident in delivering our strategic growth plans during 2022 and look forward to updating you further at our preliminary results. I'll now hand over for questions.
[Operator Instructions] We will now take our first question from Marcus Diebel from JP Morgan.
Three questions from my side. I think the first one if you can talk a little bit about latest developments in nutrition. What are currently purchasing prices to it? And how do you think you can basically manage your pricing to customers. So the question on inflation? Second question is on Ingenuity Commerce. Obviously, we are still at a very early stage, but the number came in slightly below the GBP 15 million that you were highlighting earlier. Question is -- What happened there? I appreciate we talk about very small absolute numbers. Just wanted to hear your views. And then third question, if you can give us already an indication of working capital. How much this reversed in the second half. We've seen the net cash number, but I wanted to understand the working capital dynamics, in particular, that would be very helpful.
Sure. So of the 3 questions, 3 different areas. Myself and Lucy, Lucy's the CEO of Nutrition, will address the nutrition. John Gallemore do Ingenuity and Steve or Matt will do the working capital. I mean, look, in terms of how we've seen inflation in the commodity world, clearly, that has seen a rapid acceleration in the pricing of way protein. If you were to look at the sweet whey protein, it's doubled on probably just over the last year versus global commodities as a basket, I think, are up about 42%. We've seen a rapid acceleration in that price and probably the last 3 months will be the most the strongest kind of period. Now what we would typically do in a normal market, we are a very, very large buyer in the market. We would forward by maybe 6 months. And if we deem the pricing to be very sensible, we even forward by a year, products. Now where we are today with the pricing so elevated, we wouldn't forward but to that extent at all. And so we would -- like the rest of the market, we will sit and wait because we do believe that the current pricing of raw materials are far too elevated and will reduce during the year. I'll let Lucy talk in a second as well around the pricing, how we deal with customers on that. But it's safe to say what we have a brand to protect. So what we don't do is yo-yo around with pricing. So there would be delays there. But Lucy, anything you want to add?
Yes, absolutely. I think it's worth just reminding everyone that my protein is primarily direct to consumer. So relative to most of the other brands and competitors in the market who might be almost entirely retail B2B or a heavier mix of B2B. We have a -- it's much easier for us to be really agile with our pricing strategy and pass on some of those price increases to customers. And given the scale of us and being the market leader in most of our core territories, we often see that any of the other local D2C brands will follow. So as of the latest numbers that I saw this morning, our current average sell price on those products is tracking at plus 30% year-on-year, and we're not actually seeing any negative impact to demand off the back of those price increases, albeit, of course, it has a ceiling before customers will start to consider their consumption. In terms of where we see it going, I think we'll probably feel paying for another 3 to 4 months and everyone's anticipating the prices will start to come down over the next month or so, and then it's just a case of seeing that cycling through the supply chain.
John on Ingenuity. We see -- we've been in this sector now probably for the best part of 11 years if not longer. And so we see cycles in pricing all the time. What typically happens as well is whilst we delayed the passing on of some pricing whilst we get a better view of the market, Similarly, you do have a very, very strong profitability profile as commodity prices start to fall. So as we see those commodity prices fallen, then naturally, we -- you see a very strong margin progression that comes with that at the same time.
John, do you want to do ingenuity?
Yes, sure. Just to reiterate the position then with Ingenuity Commerce. So the annual growth rate was 135%. We delivered over GBP 15 million revenue in the quarter, which was over 30% higher than our previous record quarter. In terms of the key stats that we pull out, we increased the number of live websites to 187, which is a 100 up in the year. The recurring revenue per website increased to GBP 240,000. The recurring revenue mix was at 72%, and our annual revenue run rate has increased to GBP 61 million. Now those stats reflect how successful GMV growth was with our clients in the quarter. In addition, although we don't mention any specifically ourselves, you may have picked out the press release where we'll be working with them on their digital revolution. Now we put a substantial amount of work into winning substantial clients like that. Although none of the revenue on that account will be recognized in this year, that will start to pick in quarter 1, along with other substantial wins that we've got. And I'll remind everyone in terms of guidance for 2022 of GBP 108 million to GBP 112 million. That's predicated on launching 400 and taking a number of client solutions to 400 from 109, we got at the moment, which is 85% of those contracts that are already contracted with us. It assumes a recurring revenue per website of GBP 170,000 and a recurring revenue mix of 60%. So it doesn't include any of the new business that we currently can win, have won and expect to win through the year. So we're super confident on the numbers for 2022. I'm very proud of the growth that we've delivered and the success working with our clients in 2021.
Mark, it's Steve. I'll probably just pick up on working capital point just on the basis that we're not going to go into the fullest detail it might be at a full year statement. It's post-close trading statement. But of course, no real change in any of the working capital dynamics that we've guided to in the past. Cash position, very strong in the business. That liquidity enables us to ensure we use the balance sheet to drive best availability, supporting revenues. You've got supply chain globally, which has got some availability issues across lots of sectors. We're not immune to some bumps in that. So we use the working capital. We use the balance sheet to support that revenue picture. But no major change and liquidity remains very high as per the release.
We will now take our next question from Andrew Ross from Barclays.
I've got 3 questions if that's okay. The first one is just dive a bit more into your margin thinking for '22. You've clearly made a statement in the release that you expected to improve as you go through the year, but perhaps you could just call out all of the moving parts around why you think it improves in the second half. You've touched on whey prices, but remind us of the other drivers there. And I guess, if you could be a bit more precise in terms of where you think margins might end in '22 against '21, we'll be able to a lot of unknowns, but that would help? The second question is the numbers one. Maybe if you could just update us on exceptional items for 2021. I think we were talking about GBP 60 million previously is that still the number? And then the third one, I appreciate this is just a trading statement, but one, deliver us any update on the more structural staff, legal separation, SoftBank relationship, listing with BC, et cetera.
Sure. So on that then, in terms of margin progression, myself and no doubt Steve will just talk you through that. Exceptional items, Matt Rothwell will cover that and then we'll come back to myself or Steve on more structural things. And in terms of then, how should we look at margin progression. I mean as we've reiterated, just echoing John's comments there, Ingenuity is obviously the very high margin element where we license our software typically around 60% EBITDA. You will see, obviously, as the recurring revenue just continues to grow with the client wins and that's been very strong for us. Then we've reiterated on that. I think the guidance of north of GBP 100 million of Ingenuity revenues. So as a result, that's a very strong accretive EBITDA number that feeds through the 60% EBITDA there. Now that obviously naturally gets bigger and bigger through the year, so that has a greater weight in as we progress through the year. In terms of then things like nutrition, which is the other -- it's safe to say, you should probably assume, Beauty is relatively stable. And then in terms of nutrition, what we would expect to see is that there'll be -- commodity prices will remain elevated for the very near term. We're obviously no experts and nobody really in terms of the direction of travel on commodities per se, but all the charts we've seen and all of the market feedback is we would expect that to fall in the weeks ahead, whether that's in 6 weeks, 8 weeks, 10 weeks. So what we're guiding to there is, is second half, we'd expect the commodity market to be far more normalized and we'll be delivering far stronger contribution at margin level from the Nutrition division. So that's how we see the story on that. Steve wants to chip in, I believe so.
Yes. Look, I was just building on this morning's call [indiscernible]. It's definitely, for us, a 4 halves picture for '22 and '23, where each half will be building on the prior half. So you've got an implied H2 '21 EBITDA of 6.6% to 7.1%. You'll see H1 '22 build on that at the top end and beyond that, and you'll move into the 8% in H2 '22, as Matt said, for some of that second half weighting. So as a range of outcomes, we're 17 days into the year, but it's a range of outcomes for '22, you'd be safe to look at around 7.8% to 8.2% EBITDA, and then you carry that H2 momentum, '22 momentum into '23. And you're getting back to with real confidence, a 9% plus EBITDA margin for the group in '23. And then that breaks back from that just to help people's reference margin, 9.3%. -- historic reference margin, less 0.3% for the beauty dilution, which we've touched on previously, less 0.9% for the FX, which probably leaves around 0.5% or so for inflation. And as Matt touched on, whey is certainly transitory. It's a when, not if we see those improvements come back, as Matt and Lucy touched on. And those permanent inflation items were just mentioned, labor being probably the best area where that's captured for us. But we are offsetting that with Ingenuity, as Matt has said, in that high-margin business as usual. It's growing as a percentage of revenue mix. So nothing new required there, just more of the same, but also worth noting automations, mitigation of those permanent inflationary pressures. We are probably 18 months, 24 months ahead of a lot of people's thinking and development on automation, and we've really seen the benefits of that. So the next 4 halves is a quietly optimistic picture around margin against a very robust demand picture as well.
And then, Matt, do you want to just quickly think of the exceptional picture?
Yes, the guidance unchanged from Q3. So we guided at Q3 to around the GBP 60 million mark reflective of the incremental cost of the separation work stream, which continues to progress ahead of the full timetable we outlined, which probably leads in well to Steve covering off on the SoftBank transaction.
On the separation side of things, Andrew, look, this is a trade of debt. So we're not intending to update on any of those things. Safe to say that we are very busy away in the background working on all of the key projects that we've outlined, and we'll update the market in due course once we're there with that. And then on that separation piece, I think we've said half one by the time that we should have all of that in position internally. Hopefully, we'll be delivering ahead of that, but we'll update in due course.
We will now take our next question from Rob Joyce from Goldman Sachs.
I've got 3. A couple of which to sort of clarify. So just based on what Steve you just laid out there in terms of the margin outlook for the year ahead, are right in getting to a range of around sort of GBP 210 million to GBP 220 million EBITDA current best look. And just understanding how much of that is predicated, I guess, on whey price is falling? Or just what's the sensitivity if whey doesn't fall and/or prices fall back to historic levels as the whey price falls in terms of your prices to customers? Second one, I'm just sorry, Matt, I missed on the cash exceptionals, did you confirm the GBP 60 million for 2021? And just can you give us an idea of where you expect that to trend to in 2022? And then finally, just on the Matalan contract, can you help us understand exactly what you're doing with Matalan? And maybe give us some context on the size of recurring revenues on that one?
Thanks, Rob, Steve here. So just on the first point, the range is correct, 7.8% to 8.2%. [indiscernible] problem that should be better, hopefully. You're correct with the impact of 7.8% to 8.2% on a circa 25% growth is going to throw out GBP 210 million, GBP 220 million, that order of magnitude. So I agree with that comment. In terms of the impact of whey, is in the 0.5% on that bridge. I just bridged the 9.3% historic reference margin. You've got, just to repeat, 0.3% of that was M&A dilution from Dermstore and Beauty, which obviously we're working through, and we talked to you in the past, you've got 0.9% of FX. So of the 0.5% inflation whey is a meaningful part of that. We're not splitting out for people what the mix is of the 0.5 between items like labor, freight and whey, but it's a seriously material cost of goods for the group. And it has 2x in its price per tonne. If you look at the reference price of sweet whey, and we primarily buy in Europe versus the U.S., so that's the right reference, and it's 2x since Q4 '20. So it's a meaningful impact. So the question, the reason for giving a range is twofold. One, we're 17 days into the year. And two, there's some timing points around that, those transitory elements that we can't be any clearer on at this stage. Just to save the inefficiency of a handover. Matt did confirm the Q3 position. And I think on a go-forward basis, we're not giving the full guidance yet. It's a trading statement post-close update around the exceptionals for this year, points to consider, of course, would be M&A will be less. We've got the separation projects. But ultimately, we will come back to people. So we're not changing the guidance on those. And at this point, I'll then hand to John on Matalan.
Yes. Look, I'll be guarded in terms of what I say about Matalan. I don't want to read into commercial confidentialities. But I would say that as a business, Matalan has a substantial digital business and have taken a leading position in terms of their investments in their digitalization strategy. They're already really well progressed in terms of their own automation plans and delivery into their fulfillment network. We'll be working with them on their e-commerce strategy. And I wouldn't want to say any more than that.
We will now take our next question from Anubhav Malhotra from Liberum.
I have a couple of questions, hopefully easy ones. Firstly, on the FX impact that you've seen in this year or 90 basis points, are you guiding on anything on what the negative impact would be for FY '22? And then on the Beauty division, I just wanted to understand if in fourth quarter, did you see organic growth in Beauty because in my calculation, suggests that M&A was a very significant contributor to the 37% growth you achieved in Beauty division. But could you give any guidance on what the organic growth was?
Steve, you do the first, Rachel, CEO of Beauty, will do the second. Steve, you do the first and Rachel will do the second.
Sorry, I was just going to pick up on the beauty piece actually on the organic. And just to put some constructs for Rachel, obviously, we've not given the breakouts through the full year on organic versus inorganic. I think the analyst worked back. We still have some of the notes out this morning have it right as well. You've got a 15% type mid-teens organic growth business across the group, THG. Beauty is the biggest part of that. You see Nutrition for the full year at plus 17% with minimal impact from M&A. So nutrition is kind of in line with that as a proxy as well. So what you've got in the Beauty business is a strong organic growth story over the year in line with those group numbers. You've got an acceleration in organic across both Beauty and Nutrition in quarter 4 versus Q3. So you've actually got a really strong organic growth picture across Beauty and the group. And that's kind of read across as well into what you see with the new customer wins. On a 2-year stack, new customer growth in the business is 89%. If you strip out the M&A to your point, that is 76%. So you've got 76% more new customers in THG across 2021 than you had in 2019, which is your pre-pandemic cohort, which is exactly where you would ever hope to be, particularly given your existing behavior from your customers is repeating, 80% of revenue coming from repeat and stable average order value. So you go into 2022 with a really strong organic and demand picture across the business and beauty in particular? And maybe Rachel if you just wanted to take this chance for some beauty highlights?
Yes, certainly, as Steve touched on. We were very pleased with the organic growth that we saw through quarter 4 and acquisitions also continue to track in line as we integrated Cult Beauty and Dermstore onto the platform. And trading their first key and trading period through quarter 4 on the platform, we're very encouraged by the results that we've seen there as we set up to deliver further growth next year.
And then just touching on the FX point, just to remind people, the principal pain point there for us is the Asian currencies. Obviously, in the U.S. dollar, we are naturally hedged as a business we will, in the medium term, become naturally hedged in Asia. Most of the pain has been the strengthening of sterling which tended to happen through the course of the first half of last year. And on the Asian currencies, we remain in a similar position to H2.
We will now take our next question from Simon Bowler from Numis.
First one, just can you comment on kind of what gross margins that you got second half of the year? It sounds like a decent amount of the margin pressure was captured there. But any color on that would be useful. Secondly, in terms of kind of freightage costs, in your guidance for the year ahead or your commentary for the year ahead, I presume you're continuing to treat some of the higher costs as exceptional within that? And then you are still seeing the level of those costs kind of start to normalize? And then thirdly, was just on Dermstore, where I think you referenced kind of assuming beauty margin stable year-on-year. Can you just kind of confirm you're still expecting kind of Dermstore margin progression in the year ahead? And perhaps give some color on what the drivers of that margin progression would be for that business?
I think Simon, this is Steve here. I mean I'll pick up and if the team wants to jump in on any of those, then great. I mean, look, you've kind of got it right in your question around gross margin. I think we talked about some of the cost pressures that we've seen. And you'll see a number of those in the gross margin line. On the freight cost as well for this year, again, 17 days in, too early to talk to how we're going to see the exceptionals on that market. Safe to say it remains extremely disrupted, but the picture changes rapidly, of course, as we've all seen with the impact of our Micron and then to a point, a quite rapid unwind of certain regions and territories in their response to what they're doing with Omicron lockdown. So we'll keep updating on that as we go through the year. It's certainly too early to say. And then on Dermstore, yes, the margin progression that we touched on is expecting to come through is coming through -- has been coming through. As a reminder for folks, we spoke mostly about or place the emphasis for Dermstore really on margin growth rather than revenue growth -- those key areas for margin growth are multiple really, and they each have different lead times, changing buying terms is an opportunity when you bring scale buying power that we have to any piece of M&A, and that applies to Dermstore. But again, that has a lead time and there's no one big reveal for that as you're getting through hundreds of brands. Other areas to think about are, of course, on retailing your own brands in beauty, which we talked about a number of accretive areas in our business model on this call, but we haven't touched on own brand D2C sales in beauty they have an 85% gross margin. So that's an accretive area where with Dermstore, you've got the most switched on highest number of skin focused consumers online in the U.S. It's -- it's a real critical asset in that sense. So a great audience for our own brands. And then, of course, on the margin picture, you've just got a general operational leverage, lower cost to serve across multiple of areas, whether it be technology or real-world infrastructure where you get benefits of scale. So all of those things can take a 24-month picture to come through at different time frames. We're happy with how it's progressing.
Great. And then sorry, just one more, if I may, Lucy, can you just talk a little bit around regional trends in my protein. I think last year spoke, there's some early encouraging signs in India and possibly even in the U.S. I don't know to what extent some of your growth funds there may or may not have been disrupted by what's happened to pricing, but any color around kind of regional dynamics there would be useful?
Take that one. So -- Some of the key success stories for 2021 remain to be the U.K. and the U.S., both of which grew over 25% and over 70% on a 2-year basis. we saw continued success in some of those emerging markets, the like the Middle East and India, which are becoming a bigger piece of the power for us and both grew at over 60% in the year. And then slower growth, but still positive high single-digit growth from some of our more mature European territories and from Asia, where we did see some disruption across China and Japan impacted by some supply chain challenges in the year.
We will now take our next question from Roland French from Davy.
Three questions, if I could. Just continuing on nutrition, if you could give a little bit of color around format trends, I guess, kind of core powders, our TAE and the performance of the adjacencies? And then secondly, in context of Ingenuity Commerce, I think from memory, the revenue share component, at least at the Capital Markets Day was very small, it might have been 10% as you look into the '22 guide, what are you assuming there in terms of the take rate contribution? That would be helpful. And then finally, just generally across the D2C platforms, what you're seeing in terms of color and trends around customer acquisition costs, whether that's, I guess, the pay channel mix, the social platforms, the influencer commission, et cetera. I guess, generally, I guess, the question is as lockdown unwinds, is it costing you more marketing dollars effectively to acquire or retain those customers? And I'll leave it at that.
Yes. So I'll take the question. Just regarding the format trends in nutrition. So we're seeing different trends across different markets relative to, I guess, where they are in the life cycle across nutrition. But if I just give you a broad brush view the fastest-growing category for us in the year from a nutrition perspective, continue to be the Myvegan brand, which is growing over 100% on a 2-year basis. We are still seeing extremely strong growth in our core powders and traditional sports nutrition business, but also a lot of that is coming from innovation within that. So one of the fastest-growing SKUs for us is our Clearway protein, which we launched 18 months ago as a world's first to market. And we've rolled out quite a lot of innovation in that space, which is doing extremely well. Myvitamins grew single digit in the year, but just given the growth on the prior year, that is a structural trend that we expect to remain. So demand levels remain elevated in line with COVID, albeit not continuing to grow on those COVID levels. And then within that category, we're seeing really great successes from new formats, so less traditional pills and more gummies, sprays and tinctures and that kind of thing. So I guess -- that gives you a good view. RTDs is quite a small category for us, although it's growing at triple digit just given the volume of SKUs that we've launched in the year, given the acquisition of Berry men's, which means we now produce cans in-house. So we're seeing some really good success there, but it is quite a small part of the business so far.
[indiscernible] 10%. Look, we expect that to be consistent into 2022. Look and a couple of reasons for that. Given the rate that we're actually growing new business, we expect that to remain the same. But also where we replatform new businesses, where we typically take a revenue share in the second year on the upside. And that is the differentiation of our model because we're working with claims to deliver new business growth, we defer any revenue share to be basically reward based. So we expect that to remain at 10%.
Just touch on the question on marketing costs. So through the year, I think similar to a lot of online per sets, there was definitely an increase in the like-for-like cost of paid media versus previous years. What we've worked really hard to do over the last year is to offset that by getting more sophisticated in how we're buying traffic through our paid acquisition channels. But then also one of the reasons that we stressed the importance of apps and influences in our ecosystem is that we've got more and more customers using our apps where there -- it's essentially a free cost almost to reacquire customers and to get them coming back and engage with our brands. So as we grow that, that helps offset cost inflation through paid media, and then our influencer investment. So as that's grown as a percentage of mix, it's incredibly cost effective versus paid media acquiring customers. And then what we've seen in that channel, in particular, is as we've got more and more influencers in our network, we're at 30,000 now as we finish the year. We're getting more and more efficient in terms of how we're executing campaigns with influencers, so we are actually seeing our cost to acquire customers through that channel, either stable or in decline for each of the brands. So that's how we've been able to offset the pressures that we've had in terms of paid meter inflation.
There appears to be no further questions. I would like to turn the conference back to Mr. Moulding for any additional or closing remarks. Apologies, we do ask you have another question if you'd like to take it.
Yes, of course.
Perfect. We will now take our next question from Paul Rossington from HSBC.
Just one question for me. You've been running these businesses for quite a period of time now. Can you just outline any noteworthy trends in terms of historic sales performance when you've been moving into periods of real wage declines historically. Yes, so just -- so I think it have the categories in which you deal, primarily beauty and nutrition been susceptible to a slowdown in growth when you see real wage declines in the past? If you could just comment on that if it's relevant?
Yes, sure. I'll take that Ross, it's Matt molding. I mean one of the key benefits of our product categories are, especially in something like beauty, it tends to be one of the last things that people would stop spending on because it's pretty central to them. As then -- and at the same time, in Nutrition, for example, the move towards healthier living is very much still there. So health and fitness as trends. So the 2 categories that we operate in are very resilient to sort of wage deflation. At the same time, our average order value is quite small in those categories. So the spend element of it when you're talking about a GBP 45 average order value, give or take for each category. And so it's not the most expensive aspect and it's one of the last areas that people would cease to spend. And then when you look at how our business models operate as well, take something like nutrition, as Lucy pointed out, it's a fully vertical -- a vertically integrated model. So we take the raw ingredients and then we put it through our technology straight through to the consumer all over the world. So that means that it's a very disruptive proposition. So on every level, as we've seen these trends through the years, we feel that the categories are super resilient. So we're pleased with that.
There are no further questions. Again, I would like to turn the conference back to Mr. Moulding for any additional or closing remarks.
Okay. Well, thank you, everybody, for your time this morning. And on behalf of the team, I would like to reiterate our thanks for your support during 2021. We look forward to updating you further at the time of our preliminary results. Thanks very much.