Hotel Chocolat posts rise in first-half profits

The specialist retailer achieved sales growth across all channels – retail, digital and wholesale – and said trading since the period end is in line with expectations.

Hotel Chocolat reported profit before tax up 7% to £13.8m in the period to December 30. Sales advanced 13% to £80.7m.

The retailer said it had opened 14 new stores in the UK and Ireland, which contributed 4% to group sales growth, and that its new VIP Me loyalty card has attracted 500,000 active customers.

The openings of its first branches in New York and Tokyo have been “encouraging”.

Hotel Chocolat chief executive and co-founder Angus Thirlwell said: “This has been another period of progress for Hotel Chocolat with strong growth in sales, profits and cash generation.

“The critical Christmas period was again successful, supported by the launch of our new and innovative Velvetiser Hot Chocolate maker and by a deepening relationship with our customers via the new VIP Me scheme. Both developments will also support our plans for the key spring seasons of Mother’s Day and Easter.

“Growth in the UK continued to deliver improvements in profitability which have enabled us to invest in the launch of two new start-ups in New York and Tokyo, both of which are showing encouraging early signs, in terms of customer response and the initial store sales performance.

“Recent trading, including the Valentine’s period, is in line with the board’s expectations and we continue to make good progress against our key strategic objectives of opening more stores, improving our digital capability and increasing our production capacity whilst testing and learning in two large new territories.”

Adjusted EBITDA for the group, which comprises Mappin & Webb, Goldsmiths, Watches of Switzerland and Mayors in the US, climbed 17.6% to £68.8m.

Watches of Switzerland’s full-year sales uplift was driven by its luxury watch division, which reported 28.3% uplift in revenue to £631.4m, representing 82% of group sales.

Sales of luxury jewellery increased 3% during the year, while UK and US like-for-likes increased 10% and 7% respectively.

The retailer’s ecommerce sales rose 18% during the period.

Watches of Switzerland, which floated with a £647m valuation in May, ploughed £33.8m into opening seven new showrooms during the year, as well as refurbishing 11 others.

The retailer’s chief executive Brian Duffy said:  I am delighted that the group’s five-year transformation has culminated in a successful IPO on the London Stock Exchange in June this year and I would like to thank all our colleagues for their huge contribution to that achievement.

“The 2019 financial year has been a fantastic year for The Watches of Switzerland group. We have continued our trajectory of strong, profitable growth in our core markets of the UK and the US with an increase in sales of 23% during the year. Current trading remains encouraging and we are confident of meeting the Board’s expectations for the financial year ending April 2020.

“We are the UK’s leading luxury watch retailer, hold a growing position in the US market, and operate in a highly attractive market in which demand for luxury watches generally outstrips supply. We are well positioned to deliver on our strategy and look forward to achieving continued growth in the year ahead.”