Hotel Chocolat Group PLC (AIM:HOTC) shares slumped more than 40% as the group warned it will post a statutory loss for 2022 after closing its stores in the United States
Despite a rebound in sales, co-founder and chief executive Angus Thirlwell said the chocolatier will report a statutory loss for fiscal 2022, largely due to costs arising from discontinuing its activities in the US.
Group turnover increased 37% year-on-year to £226 million in fiscal 2022, ahead of consensus expectations.
Annual sales were 70% ahead of pre-pandemic turnover in 2019, the company said, adding that sales grew by nearly a third in the second half of the year.
"The Hotel Chocolat brand is achieving very strong growth in the UK, and we are pleased to have beaten sales expectations and expect to meet underlying profit expectations for FY22," the company’s co-founder and chief executive Angus Thirlwell said.
"A year of exceptional sales growth following two years of reactionary tactics to the pandemic has left clear opportunities for us to proactively streamline overheads and improve gross margins.”
Hotel Chocolat said it anticipates pre-tax profit for the year will be “in line with market consensus”. However, it expects to report a statutory loss for fiscal 2022, largely due to costs arising from discontinuing its activities in the United States.
The British chocolate brand has switched to online trading in the US and plans to close its single remaining store in the first half of 2023.
It also intends to cut investment in its US and Japan joint venture, amid fears of a looming recession in North America and Covid-19 restrictions in Asia.
Future investment in the region will be limited to working capital expenditure only, it said, “in response to the change in the global macroeconomic environment”.
The company is doubling down on its new Velvetiser hot chocolate system and Velvetised chocolate cream alcohol, which it believes has further growth opportunities in the UK and the potential for low capital cost wholesale growth internationally.
It guided for “lower profits” in 2023 but has set a goal of achieving a 20% underlying earnings margin in 2025.
Shares fell by 41.7% in morning deals.