UPDATED: Hotel Chocolat plans expansion in Yorkshire

The premium British chocolatier and multi-channel retailer, which has seven stores in Yorkshire, secured revenue of £116.3m in the year ended July 1, compared with £105.2m the year before. The company opened 15 new stores in the UK and Ireland over the period, which contributed 6 per cent to group sales year-on-year.

The company said it was continuing its factory investment and a £1.4m project had been completed to increase molten chocolate handling capacity by 190 per cent.

Hotel Chocolat also launched three new international ventures since the period end. It now has a Scandinavian franchise, a Japanese joint venture, and a store in the US.

Angus Thirlwell, the co-founder and chief executive officer of Hotel Chocolat, said the company planned to open more stores in Yorkshire although he stressed he was looking for “exactly the right sites and the right deal”.

“Our Yorkshire stores are performing exceptionally well,’’ he said.

Mr Thirlwell said the company’s Leeds, York and Harrogate stores formed the “Yorkshire golden triangle”.

He added“I am pleased to report another year of significant progress for the group.

“Revenue grew by 11 per cent, underlying EBITDA rose by 16 per cent and profit before tax increased by 13 per cent to £12.7m slightly ahead of expectations. All channels achieved growth and cost efficiency resulted in an improved EBITDA margin.

“The decline of sterling created pressure on raw material costs, but we have been able to mitigate this by improving productivity and leveraging increased scale.

“The encouraging performance of our UK channels means we remain confident of further growth, with an exciting range of new product innovations for this autumn, including our Chocolat Cream Liqueur and the Velvetiser in-home Hot Chocolat system.

“We are increasingly confident that international expansion presents a growth opportunity, and will be adopting a cautious ‘test, learn, grow’ approach to our new partnership in Scandinavia and our new ventures in the US and Japan, where we intend to open our first stores this winter.

“Greg Hodder, non-executive director, will be very involved in overseeing our US strategy, leveraging his wealth of experience growing British brands in the US, including Charles Tyrwhitt shirts.

“The new Japanese joint venture will be led by Chris Horobin, the experienced former CEO of QVC Japan.

“We have also strengthened our executive team, creating a new position of chief marketing officer; Lysa Hardy joins us this September and brings a wealth of multichannel marketing experience having previously held roles as CMO at Holland and Barrett and Joules.

“I would like to thank the whole team for their enthusiasm and passion, without which these results would not have been possible.”

The board is proposing a final dividend of 1.1 pence per share bringing the full year dividend to 1.7 pence.

If approved by shareholders at the AGM (annual general meeting) on November 29 2018 it will be paid on December 21 2018 to shareholders on the register on November 23 2018.

Commenting on outlook, the company said: “Despite challenges and uncertainties in the wider economy the strength of the brand drives great customer

loyalty and we are well positioned for the future, with a strong pipeline of opportunities. Trading since the end of the financial period is in line with management expectations.”

Hotel Chocolat said that its experience in Hong Kong and Denmark has shown that customers are receptive to the brand and product range.

The company said: “Supply chains are evolving and becoming more cost-effective for the relatively small volumes at start-up scale, allowing us to adopt a competitive price position, mirroring our affordable luxury position in the UK.

Since the end of the period, the company has moved to extend its international “tests”.

In July 2018 it signed a franchise development agreement covering the whole of Scandinavia and transferred its two Danish stores to its new partner, who has already opened two new stores in Aarhus and Roskilde in Denmark.

Earlier this month, Hotel Chocolat Inc. a wholly owned subsidiary of the group, signed a lease to open a Hotel Chocolat store on Lexington Avenue, in New York, which is anticipated to open this winter.

The company added: “Also in September 2018 we signed a franchise Joint Venture Development Agreement for Japan. Hotel Chocolat initially has a 20 per cent stake with local management holding 80 per cent.

“Goods will be supplied wholesale with a royalty paid on sales. It is anticipated the first store will open in Tokyo this winter in advance of the

peak Japanese gift-giving seasons in February and March.”

Paul Hickman, an analyst at Edison Investment Research said: “Hotel Chocolat is becoming something of a role model for controlled brand growth.”