Hotel Chocolat pins hopes on stores in tough trading conditions

Hotel Chocolat reported that factors such as the costs of ending direct-to-consumer operations in the US and impairment of loans to its Japanese joint venture contributed to a statutory loss last year of £9.4m versus a profit of £3.7m the previous year.

Underlying pre-tax profit in the period to June 26 rose from £9.6m to £21.7m, which the retailer said showed the success of its core business.

Hotel Chocolat’s sales rose 37% over the year to £226m. In the UK, they advanced 35% and stores “rebounded” to generate a 23% uplift from pre-pandemic levels.

The retailer said recent retail trading has been ”in line with last year”, while online and wholesale have been softer, and it is taking ”a deliberately prudent approach to the outlook”.

Hotel Chocolat said: ”With the five largest annual gifting seasons yet to come, the continued shift we’re seeing in channel mix towards retail stores offers the opportunity to mitigate the year-to-date shortfall, meaning there is a range of potential outcomes for full-year expectations.”

Chief executive Angus Thirlwell said: “The performance of our retail stores continues to beat 2019 pre-Covid levels and subscriptions are in growth too. We have reduced online marketing spend, resulting in lower-volume but higher-quality full-price sales. Our wholesale partners are also showing caution too.

“The Hotel Chocolat brand has huge resonance with shoppers and despite the macroeconomic environment, people are still treating themselves with affordable luxury and remaining loyal and we are winning new customers who recognise our quality. 

“It goes without saying that the current environment is challenging on multiple fronts. Over the last few months, we have taken decisive steps to reduce risk and to fully pull all our self-help Ievers in both our manufacturing and retailing businesses. One thing is for sure, we will never compromise on the brand standards and values which have built our following to this point.

“We remain fiercely ambitious for the Hotel Chocolat brand for growth in both UK and international markets. Our new stores, showcasing the format of the future, opened in Norwich and Northampton and are trading very strongly. Internationally, we intend to utilise more risk-contained techniques to capitalise on the proven brand appeal in major international markets. We will update on developments in due course.

“As we head into our busiest part of the year, I am confident that the strategic direction we have put in place will improve the prospects of the business for significant years to come. Our decisions to focus on full-price sales and quality over quantity, coupled with a resurgence of physical store performance, means that we anticipate December will be busier than ever.”

The retailer also reported that chair Andrew Gerrie and chief financial officer Matt Pritchard will leave next year, each having been in post for several years.

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