Despite a slight sluggishness in the share price of late, the good news keeps coming for Hotel Chocolat's (HOTC) investors. Significant capital investment in the group's factory, completed last September, increased manufacturing capabilities by around 20 per cent come the end of 2016. Chief executive Angus Thirlwell credits this for the group's ability to fulfil strong Christmas demand for newly launched products, including a festive yule log. "Once it sold out," he said, "we were able to immediately order multiple manufacturing rounds to satisfy our customers." Mr Thirlwell argued that good stock availability helped deliver higher footfall, more items per basket and a shift in the sales mix towards higher-priced items.
This doesn't mean Hotel Chocolat is without challenges. Mr Thirlwell admitted the company faced headwinds from fluctuations in raw material prices and foreign exchange rates, although the company mitigates the effect of both through hedging policies and ongoing supplier negotiations. This, along with other efficiency measures, appear to be working: gross margins expanded by 60 basis points last year to 68 per cent.
Analysts at Liberum expect pre-tax profit of £10.6m, leading to EPS of 7.6p for the year ending June 2017, compared with £8.2m and 6p in FY2016.
| HOTEL CHOCOLAT (HOTC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 265p | MARKET VALUE: | £299m | |
| TOUCH: | 265-267p | 12-MONTH HIGH: | 313p | LOW: 166p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 27p | NET CASH: | £16.2m | |
| Half-year to 25 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 54.9 | 8.8 | 68.6 | nil |
| 2016 | 62.5 | 11.2 | 7.8 | nil |
| % change | +14 | +28 | -89 | - |
