Agile management allows Hotel Chocolat to dodge Covid-19 onslaught
Hotel Chocolat Group
374.00p
16:35 24/01/24
Hotel Chocolat managed to dodge the brunt of the hit from the pandemic by deftly shifting its operations online.
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"Our physical retail usually accounts for over 70% of sales in the second half , but all locations were closed for the entire Easter period this year and beyond," said group chief executive officer Angus Thirlwell.
"It is a testament to our lovely customers' loyalty that they switched in droves to online and we contained the Group impact to only -1 4 % in the half."
Hence, full-year pre-tax profits were still seen in line with expectations, although its directors were reviewing the carrying value of its fixed assets due to the heightened uncertainty for trading, both present and future, in the wake of the pandemic which might result in a higher than usual non-cash impairment charge.
The group's topline shrank by 14% over the second half of the year to £45m but was 3% higher nevertheless over the last 52-weeks to £136m.
All physical operations had been forced to shut over the 12 weeks to 15 June, including over Easter and Mother's day, two of the group's three largest gifting seasons.
Yet digital sales more than tripled in the fourth quarter versus the comparable year ago period, helped by a 47% increase in subscription and recurring revenues, including for its Hot Chocolat refills for the Velvetiser in-home system.
Its factory in Cambridgeshire had also been closed for eight weeks while work was carried out to adapt working conditions to Covid-19 but was now operating at 90% of capacity.
So too, 119 of its 125 locations across the UK were again open for business.
Actions to react to the novel coronavirus pandemic thus resulted in some "material" additional short-term costs during the backhalf of the financial year which had nevertheless "led to improved agility and resilience of the ongoing business".
Group wide sales since the end of the reporting period continued to be in line with management's expectations.
"A similar pattern has been seen in both the USA, and in Japan, which is operated by a joint-venture partner," the company added.
The board did also acknowledge it had "less visibility than usual" for the new financial year, "given the uncertain severity and duration of the Covid-19 impact".
Yet Thirlwell reiterated plans to create 200 jobs in the UK and invest in new products, while hailing the nimbleness of its new US and Japanese operations and the outlook for growth opportunities overseas.
The group had £25m of cash on hand and total financial headroom of £60m thanks to its agreed banking facilities.
As of 1219 BST, shares in the firm were higher by 8.04% to 302.5p.