19 Jan 2023 07:00
19 January 2023
HOTEL CHOCOLAT GROUP PLC
("Hotel Chocolat", the "Company" or the "Group")
Trading Update
Hotel Chocolat Group plc, a premium British chocolatier and omni-channel retailer, today announces a Christmas and half-year trading update.
For the 9-week period ending 25 December 2022:
● | UK retail like-for-like store sales increased +10% YOY | |
● | Group total sales including international fell -8% YOY |
For the 26-week half year, ending 25 December 2022 ("H1"):
● | UK retail like-for-like sales increased +7% to £74m, and increased +25% like-for-like versus pre-Covid H1 FY19 | |
● | Group total sales including international fell -9% YOY to £130m, an increase of +65% versus pre-Covid H1 FY19 |
Revenue Growth | 9 weeks ending 25/12/2022 Year on year | 26 weeks ending 25/12/2022 Year on year | 26 weeks ending 25/12/2022 Versus FY19 pre covid | |
UK & Ireland stores 'like for like'1 | +10% | +7% | +25% | |
Total UK. & Ireland | -5% | -7% | +65% | |
Group including international
| -8% | -9% | +65% | |
1 | Like for like stores are those trading in the same location for the full reporting period and excludes refits. | |||
Christmas Campaign Highlights:
● | Set a new record for Christmas campaign sales across the UK store estate | |
● | Strongest ever sell-through of full-price seasonal products, with residual Christmas inventory into January sale -80% lower year on year | |
● | Velvetiser in-home drinking chocolate system was the star category, with new Mince Pie drinking chocolate proving a real hit | |
● | Online revenues lower YOY due to return to stores together with a deliberately lower marketing spend YOY | |
● | Wholesale revenues lower than planned at the beginning of the year due to cautious inventory management by online partners and a focus on 'quality over quantity' with fewer new partners |
Encouraging early progress on strategic plan previously announced:
● | Strong cash generation: net cash of £31m as at 18th January 2023 | |
● | Total inventory reduction of -17% year on year. Perishable inventories are -35% lower YOY whilst non-perishable hardware increased YOY to improve availability. Inventory reduction supports increasing mix of full-price sales in second half. | |
● | Overhead cost reduction plan is on track | |
● | Improving sales trend following record UK temperatures in Q1 which temporarily hit consumer demand across retail, online and wholesale channels. |
International growth: Japan licence deal announced earlier this month shows progress on capital-light strategies to optimise the proven brand appeal. Short term we will continue to see temporary YOY reductions in international revenues from Japan and US whilst the adaptations to our strategy begin to take effect
UK growth: New store format and up-sized re-sites have performed strongly, leading to increased plans for UK store estate growth over the next 3 years
Outlook
'Quality over quantity' continues to be our focus, with FY23 previously indicated to be a transition year towards an improved business shape from FY24 onwards, with the goal of 20% Ebitda margin in FY25.
The Group continues to trade in line with market expectations2 though we remain cautious about consumer sentiment over the upcoming seasonal events of Valentine's Day, Mother's Day, Easter, Eid and Father's Day.
We expect the trend of customers reverting to stores to shop to continue in the second half, which is advantageous to the brand because our stores are well invested to deliver an uplifting experience for customers.
Notice of Results
The Board expects to announce the Group's results for the six months ended 25 December 2022 in early March 2023.
Angus Thirlwell, Co-Founder and Chief Executive Officer, said:
"A late festive surge delivered sparkling store performances. When times are tough, shoppers prioritise quality products that are really worth it. Hotel Chocolat will continue to live up to these expectations: investing in more cacao and less sugar, funding nature-positive cacao farming, and championing British-made quality.
"We have grown Hotel Chocolat by 65% over the period since the start of the pandemic, adapting to some of the most difficult economic conditions on record. Taking a year, over FY23, to sharpen-up our operating model is the right thing to do, before we embark on further pursuit of the multiple growth opportunities ahead for our brand."
2. | The Company believes that current market expectations for the year ending 25 June 2023 revenues of £213m and underlying profit before tax of £8m. |
Enquiries:
Hotel Chocolat Group PLC | Tel: +44 (0) 1763 257 746 |
Angus Thirlwell, Co-Founder and CEO | |
Peter Harris, Co-Founder and Development Director | |
Matt Pritchard, CFO | |
Liberum (Nominated Adviser and Sole Broker) | Tel: +44 (0) 20 3100 2000 |
Clayton Bush | |
Edward Thomas | |
Miquela Bezuidenhoudt | |
Citigate Dewe Rogerson | Tel: + 44 (0) 20 7638 9571 |
Angharad Couch | |
Ellen Wilton | |
Alex Winch |
Notes to Editors:
Hotel Chocolat is a premium British chocolate maker with a strong and distinctive D2C brand. The business was founded by Angus Thirlwell and Peter Harris, who are still executives within the business, and has traded under the Hotel Chocolat brand since 2003. The Group is unusual in being a grower (organic cacao farm in Saint Lucia), a manufacturer (Cambridgeshire, UK) and owning its extensive direct to consumer channels (branded stores, websites). The Group was admitted to trading on AIM in 2016.