Hotel Chocolat enjoys sweet Christmas but costs increase

Hotel Chocolat has revealed a boost in sales over Christmas, although bosses warned that the growth came at a higher-than-expected price.

Bosses at the chain said sales in the 13 weeks to December 29 jumped 11% compared with the same period last year, while sales in the six months to the same date rose 14%.

During the six-month period, the retailer opened nine new sites in the UK, two in the US and a further three in Japan through a joint venture.

To cope with international demand, the company said it would be changing the way its supply chain operates, to become more internationally focused.

Chief executive and co-founder Angus Thirwell said: “While much of 2019 was about getting started in these large new markets, 2020 will see us accelerate our supply chain transformation.

“This focus will rebalance us from being a UK-based company operating from owned channels, to one more suitable for multi-channel, multi-territory international supply.”

He told the PA news agency: “When we’re delivering our freshly made chocolates from our factory in Huntington to Glasgow, if the order isn’t 100% what they were expecting, they will know it will come on the next delivery.

“That’s what we’ve built – because we’re supplying to ourselves. What goes on in the stockroom can tolerate a certain level of imprecision.

“When it’s a case of exporting to the toughest market in the world for food products – in Japan – it’s binary. You’ll either get it 100% correct or fail. Behind the scenes we’ve had to pedal really hard to get up to those standards.”

Hotel Chocolat added that, since December, sales continue to be in line with expectations, but “the cost to deliver this growth was modestly higher due to inefficiencies in the supply chain which are being addressed in 2020”.

The company said its home hot chocolate machine, the Velvetiser, “continued to grow in popularity” with customer demand for new recipes, including dark mint and white raspberry flavours – exceeding initial forecasts.

Last month, Mr Thirlwell revealed he had started asking landlords for rent reductions, feeling his business was being penalised for its success, whilst neighbouring retailers were getting cuts using an insolvency process called a CVA.

He said reaction had been reasonably positive.

The boss added: “We definitely had some reaction from landlords, but they didn’t panic.

“We’re trying to inject a dose of realism. Landlords want sustainable business models and I’m a great believer in win-win arrangements.”