Covid-19 pushes Hotel Chocolat into the red
By Abigail Townsend
Date: Tuesday 29 Sep 2020
(Sharecast News) - Hotel Chocolat Group swung to a full-year loss, the chocolatier confirmed on Tuesday, after the Covid-19 pandemic closed stores over the key Easter period.
The Aim-listed company reported a 3% rise in revenues for the year to 28 June, to £136.3m, but profits before tax and exceptional costs tumbled to £2.4m from £14.1m a year earlier. Impairment charges pushed the numbers into the red, with bottom line pre-tax losses coming in at £6.5m against a pre-tax profit of £10.9m in 2019.
Hotel Chocolat said that while the first half had seen revenue rise by 14%, in the second half they had fallen 14%. All physical locations in the UK, which typically generate over 70% of second-half revenues, were closed for 12 weeks, including over the "key Easter period".
Angus Thirlwell, co-founder and chief executive, said: "The challenges of Covid-19 have pushed us to accelerate many of our existing plans and strategic initiatives, helping us to strengthen our financial position, improve our multi-channel 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 US and Japan."
Looking ahead, he added that while uncertainty was set to continue, "our pipeline of potential growth opportunities has never been stronger".
The company said it responded quickly to the lockdown, including fitting out a new enlarged distribution centre, which provided "100% more supply chain capacity". In the first 12 weeks of the current year, digital sales rose by over 150% year-on-year, and group trading was in line with management expectations.
Jonathan Pritchard, analyst at Peel Hunt, said: "As with most retailers, forecasting with so much uncertainty ahead is impossible, so we keep our numbers unchanged.
"The best way to think of Hotel Chocolat is a strong brand doing everything right, with global aspirations and an untapped online opportunity. This is worth a lot and the shares are decent core holding based off historic earnings."
Peel Hunt has a 'buy' recommendation on the stock, which by noon BST was trading 1% lower at 340.0p
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