Hotel Chocolat reports surge in online sales
said online sales in the lockdown period increased over 200% year-on-year in the fourth quarter as customers switched to digital purchasing in its FY20 trading update to 28 June 2020.
The retailer reported FY20 revenue up 3% to £136m in the year to June 28, – with sales up 14% in the first half and down by 14% in the second half.
Whereas sales from physical locations were lower year-on-year, digital sales increased over 200% year-on-year in the fourth quarter which was also supported by a 47% year-on-year increase in the sales of subscriptions and recurring purchases, including Hot Chocolat refills for the group’s in-home hot chocolate makers.
While the lockdown period coincided with Easter and Mother's Day, two of the largest gifting seasons, the group said it was able to migrate ‘a significant proportion’ of these sales online.
The group’s Cambridgeshire factory, which was temporarily closed for eight weeks to ensure Covid-secure working, re-opened in May and is operating at 90% of normal capacity.
While experiencing material short-term costs in the second half of the year, including lower gross margins and increased overheads due to the adoption of new working practices, the group said it ‘has led to improved agility and resilience of the ongoing business.’
The group anticipates underlying pre-tax profit to be in line with expectations and remains well capitalised with £25m cash on hand, giving £60m of headroom in its agreed banking facilities.
Shares in Hotel Chocolat were trading 2.68% higher at 287.5p on Friday morning.
HOTC price chart
Currently, 119 out of 125 locations in the UK are now open for business and sales in "High Street" locations are performing more strongly than in city-centre "commuter" locations while digital growth remains ‘very strong’ and group-wide sales since the period-end are in line with management expectations.
The Board has acknowledged less visibility than usual for the 2021 financial year ‘due to the uncertainty and duration of the Covid-19 impact’ but told investors that it remains confident ‘in the resilience of the brand and the potential for growth and success in the future.’
“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, Co-Founder and Chief Executive of Hotel Chocolat.
"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.”
“We are confident about the prospects for our business and are actively creating 200 new jobs this year, primarily roles in our UK chocolate-making factory and enlarged distribution centre.”
"Our new businesses in Japan and the US have adapted nimbly and we remain confident about our opportunities overseas in the years ahead,” added Thirlwell.
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