Hotel Chocolat is in an odd situation whereby plenty of people are buying its products, yet it has made a big strategic misstep with overseas expansion.
At face value, revenue and profit is up, UK store sales are way ahead of pre-pandemic days and margins are improving. Yet once you factor in one-off costs and adjustments linked to a change in strategy for international operations then the business is loss-making.
One could argue that businesses don’t always get things right and it is better to test the water for new initiatives and pull away or rethink if they don’t work, rather than do nothing and risk getting stale.
A new plan to shift the overseas focus to wholesale and licencing operations will reduce the need for heavy spending, and a greater push to sell items at full price will be beneficial to profit margins.
It makes sense to focus on quality rather than quantity of sales in the current environment, and to be more considered with marketing spend.
AJ Bell’s Russ Mould said: “Like all retailers, Hotel Chocolat will be hoping for a bumper festive season. Even though many people are under financial pressure there is nothing like a nice box of chocolates if you’re lacking inspiration for a Christmas present. In that sense, Hotel Chocolat could be more resilient than people expect.”