TIDMHOTC
RNS Number : 9482T
Hotel Chocolat Group PLC
24 July 2020
24 July 2020
HOTEL CHOCOLAT GROUP PLC
(" Hotel Chocolat ", the "Company" or the " Group ")
Trading Update
Hotel Chocolat Group plc, a premium British chocolatier and
omni-channel retailer, today announces a post-close trading update
for the 52 weeks ended 28 June 2020 ("FY20"), and an update on
recent trading, the Group's financial position and outlook.
FY20 TRADING UPDATE
-- Revenue of GBP136 million, an increase of 3 per cent
compared to the 52 weeks ended 30 June 2019:
o In the first half of the year, Group sales of GBP92m
were an increase of 14 per cent year-on-year.
o In the second half of the year, Group sales of GBP45m
were a decline of 14 per cent year-on-year.
-- All UK physical locations were closed for a period of
12 weeks from 22 March to 15 June. This period coincided
with Easter and Mother's Day, two of the three largest
gifting seasons for the Group. The business was able
to migrate a significant proportion of these sales to
online. The team demonstrated great agility by collecting
Easter inventory from over 100 retail locations, temporarily
reducing the online product range, and introducing pre-selected
product bundles so that the Distribution Centre could
safely handle as much of the surge in online demand as
possible.
-- In total, digital sales accelerated to over 200% year-on
year in the fourth quarter. In addition to increased
gifting sales, digital sales growth throughout the period
was supported by a 47% year-on year increase in the sales
of subscriptions and recurring purchases, including Hot
Chocolat refills for the Velvetiser in-home system.
-- The factory in Cambridgeshire was temporarily closed
for eight weeks whilst adaptations were made to ensure
Covid-secure working. It re-opened in May and is now
operating at 90% of normal capacity.
-- Whilst the actions above led to some material additional
short-term costs in the second half of the year, both
in the form of lower gross margins due to re-handling
of inventory, and increased overheads due to the adoption
of new working practices, it has led to improved agility
and resilience of the ongoing business.
-- The Group anticipates underlying pre-tax profit to be
in line with expectations. In the light of current and
anticipated trading performance the carrying value of
existing fixed assets is being reviewed. This review
may give rise to a higher than historic impairment charge,
but any such adjustment will be a non-cash charge and
will be confirmed at the release of preliminary results,
scheduled for 29 September 2020.
RECENT TRADING & OUTLOOK
-- Since early March, the Group has been focused on managing
both the immediate and longer-term impact of Covid-19
on the business. The foremost priority throughout this
period has remained the safety and wellbeing of colleagues,
customers, and communities.
-- 119 of 125 UK locations are currently open for business.
Sales in "High Street" locations are performing more
strongly than in city-centre "commuter" locations. Whilst
total sales from physical locations are lower year-on-year,
digital growth remains very strong and Group-wide sales
since the end of the period remain in line with management
expectations. A similar pattern has been seen in both
the USA, and in Japan, which is operated by a joint-venture
partner.
-- The Board remains confident in the resilience of the
Brand, and the potential for growth and success in the
future but it also acknowledges less visibility than
usual for FY21, given the uncertain severity and duration
of the Covid-19 impact.
FINANCIAL POSITION
-- The Group remains well capitalised with GBP25m cash on
hand, giving GBP60m of headroom within its agreed banking
facilities.
-- Having raised GBP22m investment capital in March, the
Group has continued to invest, as planned, for future
growth, and has recently:
o Signed a new 5-year lease on an enlarged Distribution
Centre in Cambridgeshire, and commenced fitting out,
which will increase supply-chain capacity by over
100% for FY21.
o Continued to invest in increasing UK manufacturing
capacity.
o Upgraded digital, launching a new VIP loyalty app,
with further developments under way for launch in
FY21 including gift-sending app capability and new
subscription concepts.
Angus Thirlwell, Co-Founder and Chief Executive Officer of Hotel
Chocolat, said:
" I've been hugely impressed by how our team have responded,
culturally, professionally and ethically during the pandemic . The
acceleration of change in the retail landscape has galvanised us to
speed up our plans and investments in the opportunities we were
already pursuing.
" Our physical retail usually accounts for over 70% of sales in
the second half , but all locations were closed for the entire
Easter period this year and beyond. It is a testament to our lovely
customers' loyalty that they switched in droves to online and we
contained the Group impact to only -1 4 % in the half.
"Online, our brand is now set to a significantly faster growth
trajectory, delivering gifts, subscriptions and household
indulgence . Some of this is attributable to Covid-accelerated
change , but new concept launches, and digital enhancements h ave
also supported growth . The Velvetiser in-home drinks system, the
VIP loyalty programme , and new subscriptions capability will
continue to generate growth in the years ahead.
" We remain positive about the unparalleled leisure experience a
physical Hotel Chocolat can deliver within our multi-channel direct
- to - consumer model. All we need is footfall , and so far we are
seeing that return at different rates . Residential areas are
stronger, with city centres more subdued without as many commuters
and tourists.
" We pledged at the beginning to keep the Hotel Chocolat family
together through this, and that i s what we have done. We are
confident about the prospects for our business and are actively
creating 200 new jobs this year, primarily roles in our UK
chocolate - making factory and enlarged distribution centre.
" We're excited about our upcoming new Latte coffees for our
Velvetiser in-home system, and a complete range of Nutmilk truffles
and pralines, which just happen to be totally vegan too. In
September, we will launch the Wonka-esque 'Inventing Room Panel' ;
a limited - membership subscription experience with privileged
access to try all of our potential new ideas, with voting rights on
whether they should be launched.
" Our new businesses in Japan and the US have adapted nimbly and
we remain confident about our opportunities overseas in the year s
ahead."
Enquiries:
Hotel Chocolat Group Limited Tel: +44 (0) 1763 257 746
Angus Thirlwell, Co-Founder
and CEO
Peter Harris, Co-Founder and
Development Director
Matt Pritchard, CFO
Liberum (Nominated Adviser and Tel: +44 (0) 20 3100 2000
Sole Broker)
Clayton Bush
James Greenwood
Citigate Dewe Rogerson Tel: + 44 (0) 20 7638 9571
Angharad Couch
Ellen Wilton
Kieran Farthing
Notes to Editors:
Hotel Chocolat is a premium British chocolatier with a strong
and distinctive brand. The business was founded in 1993 by Angus
Thirlwell and Peter Harris and has traded under the Hotel Chocolat
brand since 2003. The Group sells its products online and through
physical locations in the UK and abroad. The Group has a cocoa farm
and eco-escape hotel in Saint Lucia, offering complete cocoa
immersion through tree-to-bar experiences and wellness treatments.
The Group also has a flagship restaurant and cacao roastery in
London's Borough Market: Rabot 1745. The Group was admitted to
trading on AIM in 2016.
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END
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