Hotel Chocolat Group PLC Trading Statement (6200X)

TIDMHOTC

RNS Number : 6200X

Hotel Chocolat Group PLC

27 April 2023

27 April 2023

Hotel Chocolat Group plc

(" Hotel Chocolat ", the "Company" or the "Group")

Trading Statement

Hotel Chocolat Group plc, a direct-to-consumer premium chocolate brand, today updates on strategic progress and recent seasonal trading.

FY23 Financial Highlights:

 
   --   Previously announced as a transition year to re-shape the business 
         in readiness for next stage of growth in FY24 onwards 
   --   Excellent progress achieved in closing stages of this financial 
         year on cost base efficiencies in readiness for FY24 
   --   Second half trading to 23 April, which included the Easter period, 
         achieved high seasonal full price sell through of 86%, gross 
         margin up by 500 basis points 
   --   UK retail like-for-like momentum reported for H1 in the interim 
         trading update has continued to strengthen during second half 
   --   All channel Easter period sales lower than expected due to some 
         range gaps which could not be addressed this year due to transition 
         year efficiency focus, but which have already been addressed 
         for future seasonal events. Digital and wholesale channels had 
         lower revenues than initially planned due to focus on quality 
         of earnings 
   --   Customer database growth achieved in H2 to date, with >2.75m 
         VIP.Me members 
   --   Strong cash position with GBP23m in the bank and zero debt 
 

As a result, for FY23 the Group expects sales to be slightly lower than market expectations with underlying PBT now expected to be breakeven.

Following this previously announced transitional year and the excellent progress achieved in the closing stages of the year in readiness for FY24, the Board reconfirms its guidance of expecting to see a return to sales and EBITDA growth with a re-iterated target of 20% EBITDA margin by FY25 (pre IFRS 16 basis).

Confidence around the shape of the business in readiness for FY24 onwards is based on the work undertaken across the five 'business shapers' in FY23 which include:

 
   --   Trading margin up by >500bps for beginning of FY24 
   --   Manufacturing COGS material benefits achieved with inflation 
         mitigation 
   --   Overhead efficiencies achieved during FY23 of GBP5m plus year-on-year 
         on an annualised basis, with majority of benefit to be seen 
         in FY24 
   --   Cost of service material efficiencies underway to benefit FY24 
   --   Total inventory reduced by 25%, with perishable inventory reduction 
         of >50% 
 

In addition, effective work on growth drivers achieved in the later stages of FY23 in readiness for benefit in FY24 include:

 
   --   Four new UK stores in legals with more expected for FY24 
   --   New product pipeline reinvigorated after transition year, with 
         launches appearing in the market from mid- summer onwards 
 

Angus Thirlwell, Co-founder and Chief Executive Officer of Hotel Chocolat, said:

"During this financial year, Hotel Chocolat has taken effective action to overcome the growing pains of rapid growth and scaling GBP200m in revenues. We are now well set up for the next stage of growth both in the UK and overseas key markets. Getting through these barriers to growth are a real test of culture and, I am unceasingly impressed by the strength of the Hotel Chocolat culture, as we remodelled our way through FY23.

"Our manufacturing and distribution is well invested now, with suitable headroom, liberating capital for future revenue growth. We can see more than 50 new locations for a Hotel Chocolat latest format store in the UK over the next few years and our adapted approach to international major markets is making sound progress.

"We are very grateful to our growing base of loyal and new customers, who are signalling that ethical and higher cacao premium chocolate is definitely worth it."

The information contained within this announcement is deemed by the Group to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018.

The person responsible for arranging for the release of this announcement on behalf of the Company is Angus Thirlwell, Chief Executive Officer.

For further information:

 
 Hotel Chocolat Group plc                 c/o Citigate + 44 (0) 20 
                                                         7638 9571 
 Angus Thirlwell, Co-founder and Chief 
  Executive Officer 
 Peter Harris, Co-founder, Development 
  Director and Interim CFO 
 
 Liberum Capital Limited - Nominated 
  Advisor and Broker                         + 44 (0) 20 3100 2222 
 Clayton Bush 
 Ed Thomas 
 Miquela Bezuidenhoudt 
 
 Citigate Dewe Rogerson - Financial 
  PR                                         + 44 (0) 20 7638 9571 
 Angharad Couch 
 Ellen Wilton 
 Alex Winch 
 

Notes to Editors

Hotel Chocolat is a premium British chocolate maker with a strong and distinctive D2C brand. The business was founded by Angus Thirlwell and Peter Harris, who are still executives within the business, and has traded under the Hotel Chocolat brand since 2003. The Group is unusual in being a grower (organic cacao farm in Saint Lucia), a manufacturer (Cambridgeshire) and owning its extensive direct to consumer channels (branded stores, websites). The Group was admitted to trading on AIM in 2016.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [e-mail] or visit www.rns.com.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.

END

TSTDZGZDZVKGFZZ

(END) Dow Jones Newswires

April 27, 2023 02:00 ET (06:00 GMT)