Hotel Chocolat sweet on overseas start-ups as profit and sales jump
Retailer Hotel Chocolat has hailed “encouraging early signs” for its overseas start-ups as it rang up a 7% rise in half-year profits.
The chocolatier posted profits of £13.8 million for the six months to December 30, with sales up 13% to £80.7 million, helped by the launch of another 14 stores across the UK and Ireland.
The group – which now has 118 stores in the UK and Ireland – said it was encouraged by the customer response and initial sales performance for its new stores in New York and Tokyo.
It also cheered strong demand for its new “velvetiser” hot chocolate maker, with sales outstripping its expectations six-fold and helping website revenues jump 25%.
Shares in Hotel Chocolat lifted 5% after the results.
The group said its solid growth has allowed it to make its first “cautious” foray in the US and Japanese markets, both of which “offer significant potential for future growth”.
Angus Thirlwell, co-founder and chief executive of Hotel Chocolat, said: “Growth in the UK continued to deliver improvements in profitability, which have enabled us to invest in the launch of two new start-ups in New York and Tokyo, both of which are showing encouraging early signs in terms of customer response and the initial store sales performance.”
The Tokyo store opened in late November as a joint venture led by former QVC Japan boss Chris Horobin, with Hotel Chocolat initially holding a 20% stake and local management the remaining 80%.
The New York pilot opened shortly afterwards, with non-executive director Greg Hodder heavily involved in the US strategy, having previously overseen the growth of British brands such as Charles Tyrwhitt in America.
Hotel Chocolat plans to open a “modest” number of stores in both markets to test shopper demand.
The group also has a partnership in Denmark, with four stores run under a franchise agreement.
Mr Thirlwell added: “Recent trading, including the Valentine’s period, is in line with the board’s expectations and we continue to make good progress against our key strategic objectives of opening more stores, improving our digital capability and increasing our production capacity whilst testing and learning in two large new territories.”
The results showed that, on an underlying basis, interim pre-tax profits rose 11% to £14.4 million, stripping out the new launches in New York and Tokyo.
Analyst Jonathan Pritchard at Peel Hunt said: “We expect continued excellence from the core business but the game-changer could be the overseas potential.”
