Hotel Chocolat announces tilt at US market in partnership with newly-floated Hut Group as it reveals online sales and VIP club helped offset store closures
- Hotel Chocolat said that sales rose 3% to £136.2m in the fiscal year to June 28
- The chocolatier blamed its £6.5m after-tax loss on a large impairment charge
- The Hut Group’s IPO was the largest on the London Stock Exchange in 7 years
Hotel Chocolat has signed a five-year deal with the technology arm of e-commerce giant The Hut Group to expand its reach in the United States.
THG said the agreement would enable Hotel Chocolat to launch its direct-to-consumer platform in the country and also take advantage of the expanding chocolate market there, which is set to be worth $67.2billion by 2025.
The Manchester-based firm was in the headlines a fortnight ago after its shares jumped by a third on the day they began trading publicly on the London Stock Exchange, the largest IPO on the LSE in seven years.
THG’s partnership has been announced on the same day that Hotel Chocolat stated that sales rose in the year to June 28 despite the temporary closure of its stores earlier this year
Its founder Matthew Moulding said the relationship ‘comes at a particularly crucial time for the British retail sector, when brands must flex in response to the constantly evolving environment.
‘Hotel Chocolat will now benefit from the powerful and scalable infrastructure of THG Ingenuity, joining a host of other third-party clients and our own brands that have achieved global growth through our proven model.’
The partnership has been announced on the same day that Hotel Chocolat stated that its sales rose by 3 per cent to £136.2million in the year to June 28 even though the lockdown dramatically affected their store footfall.
It noted that online trade ‘accelerated’ over the period, and that this helped to minimise the loss in sales from its high street outlets, which the firm said is normally responsible for around 70 per cent of its revenues.
In the first 12 weeks of the current financial year, digital sales were up by 150 per cent, and have been particularly strong in the USA.
But while sales have grown, the business still plunged from a £10.9million profit the previous year to a loss of £6.5million, although it declared that pre-tax profits were ‘slightly ahead’ of its expectations.
The Hut Group founder Matthew Moulding (above) said the partnership with Hotel Chocolat ‘comes at a particularly crucial time for the British retail sector, when brands must flex in response to the constantly evolving environment’
It attributed the loss to a £10million impairment charge, most of which it says came from a projected decline in its store sales, with the rest coming from a goodwill payment and a £2.7million writedown on the value of its St. Lucia cocoa farm.
Chief executive Angus Thirlwell said: ‘Whilst uncertainty will continue for all of us in the coming year, our pipeline of potential growth opportunities has never been stronger.
‘We are working hard to anticipate potential trading scenarios for the year ahead and are planning prudently to be ready to adapt quickly and effectively as the situation evolves.
Hotel Chocolat said digital sales were up by 150 per cent in the first 12 weeks of the fiscal year
‘To achieve this, we have invested in our ability to increase production and expand our supply chain capacity as well as strengthen the leadership team to ensure a continued focus on product innovation, e-commerce, supply chain and sustainability.’
Hotel Chocolat also said the group’s joint venture in Japan was ‘progressing well.’ Trade is now happening in eight venues and it is preparing to launch its first dedicated range in the country for Valentine’s Day next year.
Among the new products due to launch on the market are vegan gift-box assortments, the Velvetiser Latte at-home chocolate maker, and the ‘Wonka-esque Inventing Room Box’ subscription service.
Hotel Chocolat boss Angus Thirlwell said: ‘Whilst uncertainty will continue for all of us in the coming year, our pipeline of potential growth opportunities has never been stronger’
Inventing Rooms offer Hotel Chocolat customers the chance to taste new recipes before they become available in high street shops.
Thirlwell added that the business received a further uplift from a 50 per cent expansion in its VIP loyalty membership numbers.
‘Our VIP.ME programme is at the centre of our relationship and the investments we made in people and technology over the last 18 months are key to driving our future performance,’ the co-founder said.
He added: ‘The quality of our content and benefits, coupled with the change in shopping patterns following COVID-19, has resulted in higher spend per transaction and a greater propensity to shop across all our channels.’
Shares in Hotel Chocolat Group were down 1.4 per cent to £3.45 around midday.