There are no signs that the premium chocolate market is reaching saturation point. Shares in Hotel Chocolat (HOTC) were marked up after the group delivered another encouraging set of statutory numbers, a reflection of international expansion, together with marketing initiatives designed to drive new business, while cementing brand loyalty.
The chocolatier opened two new stores in the US and three in Japan, and said it saw strong Valentine’s Day sales in its growth markets. Its new British and international locations contributed three percentage points to the group’s sales growth – it is encouraging, then, that management noted that “there is a future pipeline of similar potential locations”.
The group also highlighted rising demand for its 'Velvetiser' home hot chocolate maker, with sales up by over 200 per cent year on year. Development of the product line weighed on the gross margin, which was down by 80 basis points – but it has a higher lifetime value as customers repurchase chocolate refills, for which Hotel Chocolat has now launched a subscription service.
Growth was in part boosted by its membership group, as the VIP scheme increased by 120 per cent to 1.1m active members – management also noted that it will be introducing an app for this service.
Peel Hunt expects pre-tax profits of £14.5m and adjusted EPS of 10.4p for the year ending June 2020, compared with £14.1m and 10p in FY2019.
| HOTEL CHOCOLAT (HOTC) | ||||
| ORD PRICE: | 423p | MARKET VALUE: | £488m | |
| TOUCH: | 415-430p | 12-MONTH HIGH: | 520p | LOW: 306p |
| DIVIDEND YIELD: | 0.4% | PE RATIO: | 36 | |
| NET ASSET VALUE: | 55p | NET DEBT: | 48%* | |
| Half-year to 29 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 80.7 | 13.8 | 9.60 | 0.60 |
| 2019 | 91.7 | 15.0 | 11.5 | 0.60 |
| % change | +14 | +9 | +20 | - |
| Ex-div: | 05 Mar | |||
| Payment: | 15 Apr | |||
| * Includes lease liabilities of £54.9m. | ||||
