Hotel Chocolat reports healthy half-year profits

Hotel Chocolat has reported a pre-tax profit increase of 28% to £11.2 million. Revenue also increased 14% to £62.5 million over the six month period to 25 December 2016, with a combination of new stores and digital investment contributing to the positive results.

The retailer opened 10 new stores during the period, which contributed 4% to year-on-year sales. Seven of the new stores included a Hot Chocolat café, bringing its shop and café format total up to 10.

Meanwhile, revenues from the retailer's digital assets – including its Tasting Club subscription business – grew 11%.

The Hotel Chocolat website reported 23% year-on-year growth, which included a strong increase in online customers and basket size. The retailer recently relaunched its website in January 2017 with Salesforce Commerce Cloud, and mobile conversion is increasing significantly as a result. Meanwile, the new site is faster which has reduced dwell time.

"This has been another period of good progress for Hotel Chocolat with strong growth in both sales and profitability. The critical Christmas period was very successful, helped by good availability, popular and innovative new ranges and significantly increased digital transactions. We have strong plans in place for the key spring seasons of Mother's Day and Easter and are confident of further progress," said Angus Thirlwell, co-founder and chief executive officer of Hotel Chocolat.

"We continue to make good headway against our three key strategic objectives of opening more stores, improving our digital capability and increasing our production capacity."

Its subscription club sales declined 6%, but operating profit increased over the period. Hotel Chocolat said new recruitment of customers had been scaled back while reforming the model and launching the new website. Tasting Club products will soon be integrated with the central distribution centre, rather than outsourced. 

Zoe Mills, analyst at GlobalData, noted: "With much of the retailer’s sales revolving around seasonal occasions, Hotel Chocolat must not neglect subscriptions to its Tasting club as this provides regular revenue throughout the year."

She added: "Hotel Chocolat’s H2 2016/17 looks set for weaker growth as inflation among the wider economy results in less disposable income for consumers to spend on the retailer’s luxury confectionary and much of Hotel Chocolat’s success in the second half will revolve around its ability to draw in consumers with its seasonal Easter and Mother’s Day ranges."