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Hotel Chocolat highlights accelerated switch to online sales amidst 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."

Hotel Chocolat Group -
Image source: Twitter / @HotelChocolat

Hotel Chocolat Group Plc (LON:HOTC) told investors that digital sales accelerated by 200% in its fourth quarter as physical stores closed for 12 weeks amidst the coronavirus (COVID-19) pandemic.

The confectioner, in a trading update for the 52 weeks to June 28, noted that lockdown coincided with Easter and Mother’s Day which are two of the three largest ‘gifting seasons’ for the company, though it said it was able to migrate a significant proportion of sales online.

It noted that along with the rise in digital sales growth, it was supported by a 47% increase in subscriptions and recurring purchases (including hot chocolate refills).

READ: Hotel Chocolat expands existing loan

As stores were closed for 12 weeks, the company’s factory in Cambridgeshire was closed for 8 weeks before it re-opened in May. The facility is now operating at around 90% of normal capacity.

Currently, 119 of 125 store locations are currently open for business. Sales are said to be performing more strongly in high street locations compared to what the company described as city-centre commuter locations.

The company said it anticipates underlying pre-tax profit will be in line with expectations, albeit it cautioned that carrying values of existing fixed assets is being reviews, potentially leading to “higher than historic” impairment charges.

It noted that it is well capitalised with £25mln of cash, with headroom said to be at around £60mln – after £22mln of investment capital was raised in March.

“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,” said Angus Thirlwell, Hotel Chocolat chief executive.

"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.”

He added: “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 have also supported growth.”

Quick facts: Hotel Chocolat Group

Price: 387.5 GBX

AIM:HOTC
Market: AIM
Market Cap: £486.32 m
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