Hotel Chocolat sweetens profit forecasts

(Sharecast News) - Hotel Chocolat upped its full-year profit guidance on Tuesday, after the easing of lockdown restrictions helped boost sales.

Updating on trading for the year to 27 June, the chocolatier and retailer said final revenues would come in at £165m, a 24% hike on 2019 and a 21% improvement on 2020.

In the last 10 weeks of the year, group sales jumped 34% compared to the same period in 2019, and by 64% compared to 2020, when all physical locations were closed.

Non-essential retail was allowed to reopen on 12 April in England, and Hotel Chocolat said trading had been "encouraging" since then. "Strong trading in smaller cities and market towns has largely offset lower footfall in commuter and tourist locations," it added.

Sales were also ahead in the US, up 62% on the prior year, and in Japan, where its joint-venture partnership grew sales by 277% on 2020.

As a result, Hotel Chocolat now anticipates full-year underlying pre-tax profits year will come in above expectations.

Angus Thirlwell, co-founder and chief executive, said: "The growth avenues ahead of us have never been better.

"Our goal of becoming the most tech-activated chocolate brand is moving forward in leaps and bounds, and is already helping to power our major achievements and future growth."

House broker Liberum, which had been expecting final group sales of £160m, raised its forecast for underlying pre-tax profits following the statement, by 20% to £7.0m. It has a 'buy' recommendation on the stock and a target price of 600p.

Analyst Wayne Brown said: "The strategic building blocks that management has put in place had delivered both a highly impressive performance over the pandemic and an underlying step-change in the group's growth potential.

"The strength of the Hotel Chocolat brand and agility of the model is powering an increasingly diverse business with over 50% of revenue coming from digital, partners and subscriptions."

As at 1015 BST, shares in Hotel Chocolat were ahead 3% at 384.5p.