Hotel Chocolat Group PLC (LON:HOTC) shares gained on Tuesday after the luxury chocolate maker delivered a solid first half following the successful launch of its first stores in New York and Tokyo.
Pre-tax profit increased 7% to £13.8mln in the six months to December 30 on revenue of £80.7mln, up 13% on a year ago.
READ: Hotel Chocolat shares get sugar rush on the back of sweet Christmas trading
The company said it had a strong Christmas period, supported by the launch of its new Velvetiser hot chocolate maker and the new VIP Me rewards scheme.
"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,” said Angus Thirwell, co-founder and chief executive.
He added: "Recent trading, including 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."
However, the gross margin declined by 270 basis points to 65.8%, primarily due to demand for the lower margin Velvetiser product and the cost of the VIP loyalty scheme.
Cash flows from operating activities increased 18% to £29.5mln and the company ended the period with net cash of £21.8mln.
The interim dividend was maintained at 0.6p per share.
Liberum repeated a ‘buy’ rating on the stock and target price of 410p, saying the first-half results were “very strong”.
“A high degree of confidence in full-year numbers, a strong balance sheet and growth increasingly coming from capital light channels, underpins the quality of the investment case,” the broker said.
Shares rose 2.9% to 315p in morning trading