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Hotel Chocolat has fallen to a pre-tax loss of £9.2m in its latest full-year results, down from a profit of £3.7m the prior year, with results in part affected by the restructuring of its joint venture in Japan.
The group noted that without impairments from its business operations in Japan and other one-off costs, its pre-tax profit reached £21.7m in the period.
Despite posting a loss, revenues increased by 37% to £226.1m in FY22, up from £164.6m the prior year, with UK revenues up by 35%, as the group said that customers were still “treating themselves with affordable luxury and remaining loyal”.
While international sales grew by 126%, margins remained below internal expectations, leading to an adjustment to its international strategy and a “prudent approach to capital allocation”.
Looking ahead, the group said it will focus on “quality over quantity”, and reduce its discounting to instead target a higher mix of full-price sales.
The group noted that the “continued shift” it is seeing in channel mix towards retail stores “offers the opportunity to mitigate the year-to date shortfall, meaning there are a range of potential outcomes for full year expectations”.
It added that its focus on full price sales, coupled with a resurgence of physical store performance, means that it “anticipates December will be busier than ever”.
Angus Thirlwell, co-founder and CEO of Hotel Chocolat, said: “Much of what we are publishing today in terms of the business strategy has already been announced to the market in July.
“Since then, the performance of our retail stores continues to beat 2019 pre-covid levels and subscriptions are in growth too. We have reduced online marketing spend resulting in lower volume, but higher quality full-price sales. Our wholesale partners are also showing caution too.”
He added: “The Hotel Chocolat brand has huge resonance with shoppers and despite the macro-economic environment, people are still treating themselves with affordable luxury and remaining loyal and we are winning new customers who recognise our quality. Indeed over half of our Christmas gift range is priced between £2.50 and £8.50.
“It goes without saying that the current environment is challenging on multiple fronts. Over the last few months we have taken decisive steps to reduce risk and to fully pull all our self-help Ievers in both our manufacturing and retailing businesses. One thing is for sure, we will never compromise on the brand standards and values which have built our following to this point.”
