Hotel Chocolat interim profits drop
By Michele Maatouk
Date: Wednesday 08 Mar 2023
(Sharecast News) - Premium chocolatier Hotel Chocolat reported a drop in first-half profit and revenue on Wednesday but said it expects a return to sales and EBITDA growth going forward.
In the 26 weeks to 25 December, underlying pre-tax profit declined to £10.2m from £25.4m in the same period a year earlier, with revenues down 9% to £129.8m. Earnings per share fell to 4.5p from 12.0p.
Reported gross margin was down 200 basis points to 57.9%. Hotel Chocolat said higher input costs including production-related energy costs reduced gross margin, but were largely recovered through retail price increases.
UK and Ireland sales dipped 5% to £127.4m, while sales in Japan and the USA slumped 90% and 94% to £0.5m and £0.1m, respectively. On a like-for-like basis, UK & Ireland store sales rose 7% on the year and 25% versus pre-Covid 2019.
Chief executive Angus Thirlwell said: "The group continues to trade in line with market expectations for sales though as previously guided, we remain cautious about consumer sentiment over the upcoming seasonal events of Mother's Day, Easter, Eid and Father's Day. Depending on the Easter performance, there is a range of profit before tax outcomes between £4m and £7m for the full year.
"Following this transitional year in 2023, in FY24 and FY25 we expect to see a return to sales and EBITDA growth with a continued target of 20% EBITDA margin by FY25 (pre IFRS 16 basis)."
Broker Peel Hunt said: "We knew from the January update that 1H profitability would be lower and £10m is where thoughts had gathered. The gross margin was down by 200bps despite price increases: there was far too much markdown in the sales mix. Costs weighed heavily too."
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