Hotel Chocolat Group plc has released its Christmas and half-year trading update.
For the 9-week period ending 25 December 2022, UK retail like for like sales were up by 10 per cent year on year, with group total sales including international registering a drop of 8 per cent year on year. The retailer experienced its strongest sell-through of full-price seasonal products, with residual Christmas inventory into January sale 80 per cent lower year on year. Online revenues were lower year on year attributable it says to a return to stores as well as a deliberately lower marketing spend
Wholesale revenues were lower than planned at the beginning of the year due to cautious inventory management by online partners and a focus on ‘quality over quantity’ with fewer new partners.
The business had achieved an inventory reduction of -17 per cent year on year, with perishable inventories are –35 per cent lower, and non-perishable hardware increased YOY to improve availability. Its overall cost reduction plan is on track
Its Japan license deal announced earlier this month shows progress on capital-light strategies to optimise the proven brand appeal. Short term it expects to continue to see temporary YOY reductions in international revenues from Japan and US whilst the adaptations to our strategy begin to take effect.
The new Hotel Chocolat UK store format and up-sized re-sites have performed strongly, leading to increased plans for UK store estate growth over the next 3 years.
‘Quality over quantity’ continues to be the focus for the business, with FY23 previously indicated to be a transition year towards an improved business shape from FY24 onwards, with the goal of 20 per cent EBITDA margin in FY25.The Group continues to trade in line with market expectations though remains cautious about consumer sentiment over the upcoming seasonal events of Valentine’s Day, Mother’s Day, Easter, Eid and Father’s Day.
It expects the trend of customers reverting to stores to shop to continue in the second half, which it says is advantageous to the brand because its stores are well invested to deliver an uplifting experience for customers.
The Board expects to announce the Group’s results for the six months ended 25 December 2022 in early March 2023.
Angus Thirlwell, co-founder and CEO said: “A late festive surge delivered sparkling store performances. When times are tough, shoppers prioritise quality products that are really worth it. Hotel Chocolat will continue to live up to these expectations: investing in more cacao and less sugar, funding nature-positive cacao farming, and championing British-made quality.
“We have grown Hotel Chocolat by 65 per cent over the period since the start of the pandemic, adapting to some of the most difficult economic conditions on record. Taking a year, over FY23, to sharpen up our operating model is the right thing to do before we embark on further pursuit of the multiple growth opportunities ahead for our brand.”
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