Hotel Chocolat Group PLC (AIM:HOTC) said it enjoyed a strong Christmas, setting a new record for festive sales in the UK with its strongest ever “sell-through of full-price seasonal products.”
In a trading update, Angus Thirlwell, the company's co-founder and chief executive officer, said: “A late festive surge delivered sparkling store performances.”
The premium-priced chocolatier noted that its Velvetiser in-home drinking chocolate system was the star category, with new mince pie drinking chocolate also proving a real hit.
In the UK, Hotel Chocolat's retail like-for-like sales jumped 10% in the nine weeks to 25 December 2022, although including the international side this meant group sales were down 8%.
For the 26-week half-year, ending 25 December, UK retail like-for-like sales increased by 7% to £74mln with overall group sales (including international) down 9% year-on-year to £130mln, an increase of 65% versus pre-Covid levels.
As a result of the strong Christmas, inventory levels heading into January were 80% lower year-on-year.
Online revenues were lower year-on-year but the company said this reflected a deliberately lower marketing spend as customers returned to stores post-Covid.
Cost reduction plans remain on track and the group continues to trade in line with market expectations though it said “we remain cautious about consumer sentiment.”
“Quality over quantity continues to be our focus, with FY23 previously indicated to be a transition year towards an improved business shape from FY24 onwards, with the goal of 20% EBITDA margin in FY25,” the company added.
Liberum Capital analysts described Hotel Chocolat's Christmas performance as an “outstanding peak trading period”, adding that “the best-ever seasonal sell-through underpins confidence in forecasts.”
They suggested the company's “shares should react well noting the low valuation and rising FCF yield.”
Liberum has a ‘buy’ rating and 300p price target for Hotel Chocolat shares.