Hotel Chocolat Group PLC Trading Update (9933E)

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RNS Number : 9933E

Hotel Chocolat Group PLC

13 July 2021

13 July 2021

HOTEL CHOCOLAT GROUP PLC

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

Trading Update

Hotel Chocolat Group plc, a premium British chocolatier and digital-led retailer, today announces a post-close trading update for the 52 weeks ended 27 June 2021 ("FY21"), an update on recent trading, the Group's financial position and outlook.

 
 FY21 TRADING UPDATE 
 
 --   FY21 revenue of GBP165 million 
        -- An increase of 21 per cent compared to FY20. 
        -- An increase of 24 per cent compared to FY19, being the last 
         financial year before Covid impact. 
 
 --   Since the previous trading update in May, Group trading has remained 
       strong. With all channels open, Group sales for the 10 weeks from 
       19 April 2021 to 27 June 2021 grew 34 per cent compared to the same 
       period in 2019, and 63 per cent compared to the same period in 2020 
       when all physical locations were closed. 
 
 --   Having grown the UK customer database by 66 per cent to 3 million 
       in the 18 months since December 2019, digital and subscription sales 
       are now a substantially larger proportion of the Group's total revenue 
       and have remained so after full store channel reopening. Increases 
       in visits, conversion, and average order value have combined to substantially 
       increase customer lifetime value (LTV). 
 
 --   In the USA, product sales increased by 62 per cent on the prior year 
       with over 75 per cent of sales achieved directly through the Group's 
       US website. 
 
 --   In Japan, the Group's joint-venture partnership grew sales by 277 
       per cent on the prior year, achieving over 50 per cent data capture 
       from new customers. 
 
 --   UK store performance since the reopening on 12 April has been encouraging. 
       Strong trading in smaller cities and market towns has largely offset 
       lower footfall in commuter and tourist locations. Following the end 
       of the first lockdown in July 2020, sales from stores progressively 
       increased from July to October and the Board anticipates a similar 
       improvement in the coming months. 
 
 --   30% of the UK store estate has already been renegotiated to lower 
       rents, either in the form of a lower fixed amount, or a reduced variable 
       percent of sales. The remaining 70% of the estate has a lease event 
       due in the next 24 months. 
 
 --   Having raised GBP22million of new equity in March 2020, the Group 
       has invested the capital in service for future growth as follows: 
        -- UK digital investments 
        -- UK chocolate factory footprint increased, in preparation for 
         three new production lines which are all on-track for commissioning 
         in FY22; 
          -- a fourth truffle-making line. 
          -- a second Velvetiser flake line for our home-drinks subscriptions. 
          -- an enlarged 'bean-to-bar' chocolate facility for super-premium 
           fine cacao products and Unbelievably Vegan chocolate. 
        -- UK Distribution Centre expanded from 113,000 sq ft to 207,000 
         sq ft. 
 
 --   The Board now anticipates underlying pre-tax profit will be higher 
       than its previous expectations. Preliminary results are scheduled 
       for 28 September 2021. 
 
 --   The Group has committed to repay the full amount of furlough support 
       received in the financial year (GBP3.1m). 
 
 FINANCIAL POSITION 
 
 --   The Group remains well capitalised with cash on hand and access to 
       a GBP25m 'CLBILS' Revolving Credit Facility with Lloyds Bank, that 
       expires December 2021. To date, the Group has made no drawings against 
       the facility. 
 
 OUTLOOK 
 
 --   The strength of the Hotel Chocolat brand has made it possible to 
       serve customers in a wider range of ways, which has substantially 
       increased LTV. Combining this with the enhanced ability to recruit 
       larger numbers of customers on an attractive return, has driven these 
       strong results, including underlying pre-tax profits, which are expected 
       to be higher than previous expectations. 
 
 --   Strong digital and subscription growth models work in harmony with 
       a network of brand-building stores designed to drive deep customer-engagement 
       and be a scaled and profitable source of new and future customer 
       generation. 
 
 --   The outlook for the wider economy is improving. Whilst some uncertainty 
       remains with regards to the impact of any ongoing or future Covid-19 
       restrictions, the Board is encouraged by both the performance of 
       the brand during a period of significant challenges and varying restrictions, 
       and the strong potential for growth and success in the future. 
 

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

"I am fortunate to be able to say that the growth avenues ahead of us have never been better in Hotel Chocolat's history. The strategies we put in place two years ago are now delivering accelerated growth. Our Velvetiser in-home drinks system, our VIP and digital programmes, and our USA and Japanese joint-venture start-ups have step-changed our growth potential.

"Our goal of becoming the most tech-activated chocolate brand is moving forward in leaps and bounds and is already helping to power our major achievements and future growth. Indeed, this year we expect more than 50% of our sales to come from digital, partners, and subscription-continuity models, reflecting how Hotel Chocolat is growing and evolving. Our brand-building stores will continue to play a pivotal role in our digital-led business, with an unrivalled ability to introduce new customers to our brand.

"I am particularly excited by what we have achieved so far in the USA and Japan, two of the three largest economies in the world. We have great growth opportunities there for Hotel Chocolat and strong teams in place to drive and support it.

"We are proud to be making our chocolate in the UK and will be creating over 250 new roles this year as we grow our team, from designers and data gurus to engineers and apprentices.

"Passion Fruit & Mango Cacao Gin is proving a real hit this summer, as is new Peanut Butter drinking chocolate, Ice Cream of the Gods and our fabulous new range of coffee beans and pods, complete with an in-home pod recycler.

"The whole Hotel Chocolat family is very grateful for the support from our customers, and we are determined to drive forward our ethical programmes in the communities we work within and our cocoa growers as well as our environmental targets and initiatives."

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 (MAR), and is disclosed in accordance with the Company's obligations under Article 17 of MAR.

Enquiries:

 
 Hotel Chocolat Group Limited      Tel: [phone] 
 Angus Thirlwell, Co-Founder and 
  CEO 
  Matt Pritchard, CFO 
 Liberum (Nominated Adviser and    Tel: [phone] 
  Sole Broker) 
 Clayton Bush 
  James Greenwood 
 Citigate Dewe Rogerson            Tel: + 44 (0) 20 7638 9571 
 Angharad Couch 
  Ellen Wilton 
  Alex Winch 
 

Notes to Editors:

Hotel Chocolat is a premium British chocolatier with a strong and distinctive brand. The business was founded in 1993 by Angus Thirlwell and Peter Harris and has traded under the Hotel Chocolat brand since 2003. The Group sells its products online and through physical locations in the UK and abroad. The Group has a cocoa farm and eco-escape hotel in Saint Lucia, offering complete cocoa immersion through tree-to-bar experiences and wellness treatments. The Group also has a flagship restaurant and cacoa roastery in London's Borough Market: Rabot 1745. The Group was admitted to trading on AIM in 2016.

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July 13, 2021 02:00 ET (06:00 GMT)