Hotel Chocolat reports soaring sales as online strategy pays off

In its preliminary results for the 52 weeks to June 27, Hotel Chocolat reported profit before tax and exceptional costs of £10m – up from £2.4m in 2020 and ahead of market expectations. 

Statutory profits after tax were £5.7m, back in the black after a loss in the corresponding period of £7.5m, while underlying EBITDA jumped to £29m from £22m the previous year. 

Group revenues jumped 21% to £165m in the period, with 70% of all sales being driven by Hotel Chocolat’s digital channels, partners and “continuity products”. 

The retailer’s gross margins also increased 90 basis points to 62%, despite its international store portfolio being shuttered or disrupted for six months of the period. 

Hotel Chocolat put much of its successes down to “evolving from UK store-led brand to globally ambitious digital-led brand”. 

Capex investments increased production capacity by 66% during the period, the equivalent of a further £250m of chocolate sales per annum. 

The retailer’s equity placing in July raised a further £40m to fund factory expansion and investment into other growth channels. 

When UK stores reopened in April 2021, Hotel Chocolat said “sales growth accelerated further” across all channels, reinforcing the importance of its “multichannel sales model”. 

Group trading is currently in line with management’s expectations and the retailer said its financial position is a strong one, with net cash of £16m and liquidity headroom of £46m.

Chief executive Angus Thirlwell said: “These results show we have now evolved from a UK store-led brand to a globally ambitious digital-led brand. FY21 was a year where Hotel Chocolat improved on many fronts. Our digital and subscription-continuity models surged ahead and our global aspirations racked up more strong growth and progress.

“The continued challenges of Covid-19 pushed us to accelerate many of our existing plans and strategic initiatives, helping to strengthen our financial position, improve our multichannel capability, deepen customer engagement and loyalty, and accelerate the rate of product innovation, while continuing to make good progress in our two new and sizeable markets of the USA and Japan.

“A real highlight was developing the new Hotel Chocolat Gentle Farming Charter, applying all we have learned by farming ourselves in Saint Lucia, to ensure all our farming families can earn a living income in return for climate-smart farming.

“The living income takes into account actual family living costs and realistic farm output. In return for the higher price farmers commit to sustainable farming practices, planting of indigenous shade trees and zero illegal child labour.

“I am confident that the strategic progress we have achieved over the past year has improved the performance and prospects of the business for significant years to come.

“Finally, I would like to thank our colleagues for their hard work during the year. I am incredibly proud of how Hotel Chocolat has adapted to the disruption caused by Covid-19 and I would like to also thank our customers for their continued loyalty, and our partners for their collaboration.”