In a post-close trading update for the 52 weeks ended 28 June 2020 (FY20), and an update on recent trading, the Group’s sales of £92m were an increase of 14% year-on-year. But in the second half of the year, Group sales of £45m suffered a decline of 14% year-on-year.
This period coincided with Easter and Mother’s Day, two of the three largest gifting seasons for the Group. The business said it was able to migrate a significant proportion of these sales to online and 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 Group said in its update.
Retail landscape
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 -14% 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 have 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. “
Expectations
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,” it said in the update.
The omni-channel retailer said it adapted quickly to the COVID-19 pandemic by collecting Easter inventory from over 100 retail locations, temporarily reducing its online product range, and introducing pre-selected product bundles so that its distribution centre could safely handle as much of the surge in online demand as possible.
COVID-secure
Hotel Chocolat said its factory in Cambridgeshire was temporarily closed for eight weeks while adaptations were made to ensure COVID-secure working.
It re-opened in May and is now operating at 90% of normal capacity.
”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 is 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,” said Thirlwell.
