Top story
Hotel Chocolat’s boss said the high-end confectionery chain is back “on the front foot” as it rolls out its new experience-led store format. It comes after a year of losses as the group restructured its international business.
UK store revenues increased 14% - or 13% on a like-for-like basis - in the first quarter ended 2 October of the new financial year, with four of 12 planned new stores open and outperformaing expectations.
It compares to just one opening in the 53 weeks to 2 July as the company struggled with rising costs and falling sales.
Revenues in the past year fell 10% to £204.5m as digital sales sank 26% to £58.3m and it paused activity overseas in the US and Japan, affecting international sales.
However, its stores channel registered 8% growth to £117.8m despite it halting store expansion as it trialled the new shop format with a larger trading area and more focus on the Velvetiser drinking chocolate system and cafes.
The falling top line led to a big fall in underlying EBITDA in the year, from £40.8m to £24.1m, and saw the group sink into the red with a pre-tax loss of £800k, compared to a £21.7m profit in the prior year, which the group flagged in a recent trading update.
CEO Angus Thirlwell said: “Hotel Chocolat is on the front foot again. The hard, foundational work we put in last year is now starting to deliver the results for us.
“Our new store format is trading well above our expectations, with 12 new locations planned to open in the next year. Four of them are open already and they are located across the UK from Glasgow to Bournemouth.
“Now our Year 1 of our 3-year ‘shape of the future’ plan has been completed, it has shown to be effective in creating operating efficiencies, with our Cambridgeshire chocolate factory and distribution hubs generating pleasing improvements in performance in overcoming the growing pains we experienced last year.”
The group also relaunched its digital store in the US and the new licensed business in Japan made a small profit in the first six months of trading.
Hotel Chocolat added it was entering the key Christmas trading period in a strong position but said it was too early to give clear guidance on expected figures.
Shares in the group leapt 3.9% to 135p as investors reacted to the start of a potential turnaround.
Morning update
Pepco has achieved record revenues of €5.6bn in the year ended 30 September 2023, a rise of 17.7% on the prior period, the discount group revealed in a trading update.
The performance was driven by 24.8% growth at its Pepco fascia and 8.4% at Poundland.
In the fourth quarter, group revenues increased 12.5% year on year to €1.4bn, with Pepco up 12.6% and Poundland up 12.4%.
However, group like-for-like sales were flat in the final three months of the year as trading deteriorated significantly in Central and Eastern Europe.
Poundlnd recorded like-for-like sales growth of 4.1% in Q4 and 5.6% in the full year.
Full-year group underlying EBITDA is expected to be about €750m, compared with €731m a year earlier.
Excutive chairman Andy Bond said the performance over the past year had been “mixed” against a challenging market backdrop.
“As first announced on 12 September, the trading environment deteriorated significantly in the last quarter across Pepco’s markets, notably in Central and Eastern Europe (CEE), with weaker sales, a lower than forecast gross margin and higher costs, resulting in a reduced level of profitability in our core markets, which we are addressing,” he added.
“I look forward to outlining my key priorities at the upcoming Capital Markets Day, which includes refocusing on customers in our core CEE business, implementing a more targeted growth plan in markets where we have a presence, and accelerating the transition into a single business. By doing so, we aim to improve profitability and cash generation in our established business and deliver more measured growth. With a market-leading customer proposition, strong balance sheet and resilient operating cash flow, the group is well placed for future success across Europe.”
The FTSE 100 is up 0.3% to 7,645.11pts this morning.
Early risers included Nichols, up 2.9% to 928p, AG Barr, up 2.7% to 503.4p, and Greencore, up 2% to 85.5p.
Glanbia is down 2.2% to €15.06 and Bakkavor is down 1.1% to 93p.
No comments yet