Hotel Chocolat has said it will be cutting back on discounts in the lead-up to the Christmas holiday season and is ditching its beauty brand after swinging to an annual loss, but assured it was still on track for its busiest December yet.
The premium chocolate maker said it was planning for “reduced levels of discounting” and would sell more full-priced products, as it aimed for sales that focus on “quality over quantity” this month.
The company said it was confident shoppers would still spend their stretched budgets on “affordable luxuries”, including its Christmas gifts priced between £2.50 and £8.50.
Angus Thirlwell, the co-founder and chief executive, said he was “hoping for a crescendo” end to the festive shopping season as shoppers shift back to last-minute buying on high streets after two years of pandemic lockdowns.
“[Sales in] physical stores are building in momentum,” he said. “They are ahead of 2019 and ahead of last year.” Thirlwell said that if momentum continued, Hotel Chocolat would enjoy a good Christmas, but admitted there was “obviously a lot of jeopardy around”.
The company reported a £9.4m pre-tax loss for the year to June, after a series of one-off costs linked to the closure of high street stores in the US, as well as the restructuring of its joint venture in Japan.
It also wrote off £1.2m in relation to its Project Chocolat visitor attraction in St Lucia, because of the impact of the pandemic on tourism, and £3.4m related to its Rabot 1745 beauty brand which it is ditching to concentrate on selling food and drink. Those costs offset a 37% rise in revenue for the period to £226m.
Thirlwell admitted the company had been caught out by a sudden slowdown in trade from the spring, after it had made investments in new warehousing and manufacturing to cope with a surge in demand during the pandemic.
He said that Hotel Chocolat had now “decided to adopt a less risky approach to growing the business” by seeking business partners to sell its goods in the US and Japan.
However, he tried to strike a hopeful note, saying: “As we head into our busiest part of the year, I am confident that the strategic direction we have put in place will improve the prospects of the business for significant years to come.
“Our decisions to focus on full-price sales and quality over quantity, coupled with a resurgence of physical store performance means that we anticipate December will be busier than ever.”.
Thirlwell said that despite the deteriorating economic environment, with surging inflation reducing the spending power of households across the UK, people were still treating themselves and were staying loyal to the brand.
“The Hotel Chocolat brand has huge resonance with shoppers and despite the macroeconomic environment, people are still treating themselves with affordable luxury and remaining loyal and we are winning new customers who recognise our quality,” he said.
