Hotel Chocolat swings to loss as pandemic bites into sales

Luxury chocolatier Hotel Choclat swung to a statutory loss in the 52 weeks to June, after shuttered commuter hubs and store closures during the crucial Easter period swallowed up sales and hammered finances. 

The results

Revenue rose three per cent for the 12 months to the end of June, after a 14 per cent hike in the first half of the year was wiped out by the pandemic.

Profit before tax slumped 82.7 per cent to £2.4m, down from £14.1m in 2019, but slightly ahead of adjusted expectations amid the coronavirus crisis.

Hotel Chocolat swung to a statutory loss after tax of £6.5m, plummeting from a statutory profit after tax of £10.9m in the same period last year.

Underlying earnings before tax, amortization and depreciation (Ebitda) dropped 54.3 per cent to £9.4m from £20.7m in 2019. 

The luxury chocolate company reported a diluted loss per share of 5.5p, marking a steep slump from a profit per share of 9.5p in June last year.  

The group withheld its full-year dividend and said a “progressive dividend policy will be reinstated when conditions permit”.

Why it’s interesting

A strong start to the financial year for Hotel Chocolat was all but melted by the pandemic, after its UK stores were forced to shutter for more than three months.

Angus Thirlwell, chief executive of Hotel Choclat, told BBC’s Today programme that the outlook for its 130 bricks-and-mortar stores remains “very patchy in picture,” with city centres, transit and tourist-based locations proving a headache for the firm while commuters work from home. 

“We’re trying to disentangle the short-term impact with the more long-term shift online [and] trying to avoid knee-jerk reactions,” he added. 

The luxury chocolatier made concerted efforts to accelerate the shift online during the pandemic, securing deals with partners to satisfy demand over the key Easter period. 

However, the group noted that “a physical Hotel Chocolat satisfies customer desires that cannot be met online: warm and knowledgeable human interaction [and]  the joy of immediate impulse purchasing”.

Thirlwell said the group was in “active dialogue” with landlords “to find collaborative solutions to the ongoing disruption”, with two-thirds of its leases providing break clauses within two years.

Hotel Chocolat reported strong overseas sales even during the midst of the pandemic, with the British firm now pivoting towards Japan and the US as its key business regions. 

The group said it has “accelerated many of our existing multichannel growth plans and our rate of product innovation”, and expects to make faster progress towards its goal of becoming the leading international direct-to-consumer premium chocolate brand. 

Hotel Chocolat announced that chief operating officer Matt Margereson will step down as the director of the company, but remain a key member of the company’s executive management team. 

What Hotel Chocolat said

Angus Thirlwell, co-founder and chief executive of Hotel Chocolat, said:

“The events of 2020 have challenged all of us, but also brought out the best in us, ethically, competitively, and professionally, making us better equipped to face the future.

“Whilst uncertainty will continue for all of us in the coming year, our pipeline of potential growth opportunities has never been stronger. We are working hard to anticipate potential trading scenarios for the year ahead and are planning prudently to be ready to adapt quickly and effectively as the situation evolves.

“I am confident that the strategic progress we have achieved over the past year will build a stronger business in the medium-term with greater growth, profitability and brand appeal.”

The post Hotel Chocolat swings to loss as pandemic bites into sales appeared first on CityAM.

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