Hotel Chocolat reports ‘stellar growth’

Hotel Chocolate reported 12% revenue growth to reach £62.5M for the 26 weeks to December 25 2016.

Profit before tax climbed by 28% to £11.2M compared with the same period of 2015/2016.

Earnings per share were 26% up at 7.8p.

GlobalData analyst Zoe Mills said: “Improved online capabilities, which led to rising online transactions and increased average spend online, were also a key contributor to revenue growth.”​

‘Key contributor to revenue growth’​

Online sales would continue to grow this year, following the launch of a new website last month, predicted Mills.

“Investment in Hotel Chocolat’s factory will also improve the efficiency of its online service and product availability instore and online.”​

Despite growing online capabilities, Hotel Chocolat’s subscription club sales fell by 6%. Recruitment activities had been curtailed as the business reviewed the model in line with the new website, said Mills.

But with the retailer’s sales revolving around seasonal occasions, Hotel Chocolat must not neglect subscriptions to its Tasting club as this provided regular revenue throughout the year, she added.

“Hotel Chocolat’s H2​ [second half year] 2016/17 looks set for weaker growth as inflation among the wider economy results in less disposable income for consumers to spend on the retailer’s luxury confectionery. Much of Hotel Chocolat’s success in the second half will revolve around its ability to draw in consumers with its seasonal Easter and Mother’s Day ranges,”​ she concluded.

‘Success in the second half’​

Analyst Edison was equally impressed by the first-half results.

“Nine months after floating on AIM ​[formerly Alternative Investment Market], Hotel Chocolat has delivered excellent interim results. Although premium consumer offers may come under pressure later this year, Hotel Chocolat has a unique point of difference which should put it in a good position against less differentiated competition,”​ said the analyst’s Paul Hickman.

At flotation in May 2016, the company raised £55M before expenses. After 10 store openings in the period, bringing the total to 93, the company still had net cash of £16M, putting it in a strong position for continued expansion, he added.

“Although premium consumer offers may come under pressure later this year, Hotel Chocolat has a unique point of difference, which should put it in a good position against less differentiated competition,” ​said Hickman.