Hotel Chocolat to expand and invest in e-commerce as revenues rise 12%

By Oliver Nieburg

- Last updated on GMT

Premium chocolatier Hotel Chocolat has added wholesale listings and plans to up manufacturing capacity after a strong fiscal 2017. Photo: Wikimedia/John Phelan
Premium chocolatier Hotel Chocolat has added wholesale listings and plans to up manufacturing capacity after a strong fiscal 2017. Photo: Wikimedia/John Phelan

Related tags Chocolate

UK retail confectioner Hotel Chocolat has posted a 12% growth in fiscal 2017 and plans to open more stores and expand in digital.

The company today reported revenues of £105.2m ($141.2m) for 53 weeks ending July 2, 2017. Its profit after tax was up 115% to £8.8m ($11.8m) over the period.

Move into wholesale with Amazon & Ocado

The company opened 12 stores in fiscal 2017 - all in the UK - taking its total network to 94, which now includes 15 shop-café formats. It also has two franchise stores in Hong Kong and a presence in Copenhagen.

Analyst’s view: Fiona Cincotta, Senior Market Analyst from City Index

These solid results are all the more impressive in light of the parlous state of retail markets and position the company well to have a second crack at expanding abroad.

“Forays into Ireland and Hong Kong are expected in the not-too-distant future, while the company still sees some geographical gaps in the UK.

Add that the ice-cream and cafe-format roll-outs are still in their early stages, and there's plenty of potential revenue upside here.”

Angus Thirlwell, co-founder and CEO of Hotel Chocolat, said the company would continue to focus on its three strategic priorities: Investing further in British manufacturing operations, growing its store estate and developing its digital offer.

"All our channels are growing,” ​he said. “In retail, the new Shop+cafe format is proving popular, our new website has improved conversion on mobile devices and since the year-end, we have signed six new wholesale accounts that will make it easier for consumers to buy Hotel Chocolat products.”

Hotel Chocolat now has listings at retailers such as Amazon, Ocado and Fenwicks department store.

E-commerce investment

Hotel Chocolat grew online sales by 18% in FY 17, but subscription sales declined 5%.

The company intends to expand trials of its new weekly subscription, called the M-Box. Thirwell said subscriptions would be key to driving international sales.

Hotel Chocolat has also launched a mobile optimized website that it says has increased mobile sales conversions by 30%.

“Mobile devices now account for more than half of all traffic to our website and we expect this to increase,”​ said Thirlwell.

The company is also developing an app it says will make mobile gift sending fun and easy.

Wholesale listings

Hotel Chocolat – which owns its own cocoa plantation in Saint Lucia - invested £4m ($5.4m) in FY 17 to upgrade a truffle making line at its Cambridgeshire plant, upping its truffle capacity by 70% and its overall factory capacity by around 20%.

“Our next major investment will be in the storage and handling of liquid chocolate, due to enter service in 2018,”​ said Thirlwell.

“We are also progressing our plans to extend the factory by 2020 in order to add further chocolate making capacity to support our growth,” ​he added.

The company hopes to add more products tailored to gift occasions such as birthdays, congratulations, Eid and Diwali.

The British firm will also soon launch ‘Supermilk Pure’, a zero-added sugar milk chocolate without any artificial sweeteners containing 80% cocoa.

Thirlwell said the company expects to deliver further growth for the coming fiscal year.

“The market and wider economy may not be without challenges, but we still have significant addressable market headroom in the UK and benefit from having distribution and manufacturing directly under our control, which supports the resilience of our business,”​ he said.

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