Hotel Chocolat stepped up investment in both its stores and its digital business in a half-year in which its sales and profits both grew. It said that the success of its less-profitable Velvetiser hot chocolate maker held back profit growth, but a subscription scheme for refills is expected to make up for that.
Investing across channels
Hotel Chocolat says that despite being an early online pioneer it believes it has more recently under-invested in its digital business. In the first half of the year it hired new staff and invested in new tools in order to “make fuller use of the opportunities of our strong brand and burgeoning customer base”.
Hotel Chocolat said its membership of its VIP loyalty scheme grew by 120% in the first half of the year to 1.1m active members, supported by its newly in-sourced CRM system. It now plans to launch a VIP app.
It opened nine new UK shops in the first half, and is investing in upgrading existing stores. Its Cardiff and Brighton shops were moved to larger prime sites, while it has added in-store seating for shoppers to eat and drink Hotel Chocolat products at its London Moorgate and Gateshead Metro Centre stores. The retailer is also taking what it describes as a cautious test, learn, grow approach to new international markets. It now has four shops in the US and five in Japan, the latter through a joint venture partnership. The new UK and international sites contributed three percentage points to first-half sales growth, the retailer said.
The financials
The update came as Hotel Chocolat reported revenues of £91.7m in the six months to December 29 2019, up by 14% compared to the same period in the previous year. Pre-tax profits of £14.98m were 8% ahead of the £13.8m reported last time.
The retailer, ranked Top100 in RXUK Top500 research, said its profits were held back by two key factors. First, inefficiencies emerged in its supply chain as it sold through more channels. The causes of those inefficiencies had been identified and were now being dealt with, it said.
Secondly, profits were affected by growing sales of its Velvetiser chocolate maker, which is less profitable than its chocolate based profits. Sales of the system were up by 200% in the half year. But, says the retailer, that is offset by the lifetime value of the chocolate refills that shoppers buy for the machine. Shoppers can now subscribe, with free delivery, to the growing range of flavours available for Hotel Chocolat’s Velvetiser hot chocolate maker.
Image courtesy of Hotel Chocolat
