Hotel Chocolat warns over sales miss, shares slide

Hotel Chocolat warned on Thursday that full-year underlying pre-tax profit was set to break even, while sales will be slightly lower than market expectations after a weaker-than-expected performance over Easter, following a year of transition to re-shape the business.

The premium chocolatier said in an update that all channel Easter sales were lower than expected "due to some range gaps which could not be addressed this year due to transition year efficiency focus", but that this has already been addressed for future seasonal events.

It noted that digital and wholesale channels had lower revenues than initially planned due to "focus on quality of earnings".

As a result, it now expects sales for FY23 to be slightly lower than market expectations and for underlying pre-tax profit to be breakeven.

The company said it continues to expect a return to sales and EBITDA growth, with a re-iterated target of 20% EBITDA margin by FY25.

Co-founder and chief executive Angus Thirlwell said: "During this financial year, Hotel Chocolat has taken effective action to overcome the growing pains of rapid growth and scaling £200m in revenues. We are now well set up for the next stage of growth both in the UK and overseas key markets.

"Getting through these barriers to growth are a real test of culture and, I am unceasingly impressed by the strength of the Hotel Chocolat culture, as we remodelled our way through FY23.

"Our manufacturing and distribution is well invested now, with suitable headroom, liberating capital for future revenue growth. We can see more than 50 new locations for a Hotel Chocolat latest format store in the UK over the next few years and our adapted approach to international major markets is making sound progress."

At 0945 BST, the shares were down 9% at 159.25p.