Hotel Chocolat (Financials)

Financial overview

  • Total sales increased by 37.4% to £226.1m in FY2021 as stores in the UK “rebounded”
  • Swung back into the red with a pre-tax loss of £8.7m, from a profit of £5.5m the previous year 
  • UK online sales fell 13% in FY2021, which was ‘signficantly more than offset’ by the growth in physical retail 

Hotel Chocolat’s sales grew by more than a third (+37.4%)  to £226.1m in the financial year ended 26 June 2022 (FY2021), bolstered by a rebound in store sales.

The retailer had returned to double-digit growth in the previous financial year when group sales surged 20.7% to £164.6m, driven by digital sales, “continuity products” and partners.

The retailer’s strong upwards trajectory had stuttered the year before, hammered by the impact of the coronavirus pandemic. .

Hotel Chocolat’s revenue includes some non-retail activities such as wholesale partnerships with the likes of John Lewis and Amazon and a café and restaurant business.

UK store numbers have stayed broadly flat in the past few years. Before that, growth had been driven by ongoing expansion, with a net nine new UK stores brought on in FY2019 on the back of 14 UK and ROI openings in FY2018.

Good digital growth has contributed to the robust performance over recent years and some 70% of revenue in FY2020 was generated via UK digital, partners and “continuity products”.

UK online sales – including subscriptions – increased to £91.0m in FY2020, from £37.1m in FY2019, bolstered by the shift online during the pandemic and accounting for over 55% of sales. 

However, UK growth in FY2021 was driven by sales via physical stores, which grew strongly as pandemic-related restrictions ended, offsetting a 13% decline in online sales to £79.1m, accounting for around 37% of sales.

Total UK sales increased 34.6% to £214.5m in FY2021 to account for 94.9% of total sales.

Having decreased 1.5% to £5.2m in FY2020, international sales almost doubled to £11.6m in FY2021. However, the retailer said that margins “remained below internal expectations, leading to adjustment to our international strategy and a prudent approach to capital allocation”. It had made “provisions”  for an exit from direct-to-consumer activity in the USA and experienced impairment of loans to its Japanese joint venture.  

 In FY2019 international sales had risen 10.3%, bolstered by its expansion in the US and Japan.

Hotel Chocolat fell back into the red with a statutory pre-tax loss of £8.7m in FY2021, which it described as “clearly disappointing”.

It said that the loss reflected the “significant impacts of discontinuing activities in the year that had lower prospects for future returns, relative to the ongoing, proven new successes”. 

Statutory loss after tax was £9.4m in FY2021, compared to a profit of £3.7m the previous year, with contributing factors including costs related to ending direct-to-consumer operations in the US and impairment of loans to its Japanese joint venture.  

The retailer had moved back to the black in FY2020 with the pre-tax profit coming in at £7.8m, with a pre-tax margin of 4.8%, following a year in which the coronavirus pandemic forced stores to close in the second half and  the retailer had swung to a pre-tax loss, which decimated margins.

Chief executive Angus Thirwell said: “Much of what we are publishing today in terms of the business strategy has already been announced to the market in July. 

“Since then, the performance of our retail stores continues to beat 2019 pre-covid levels and subscriptions are in growth too. We have reduced online marketing spend resulting in lower volume, but higher quality full-price sales. Our wholesale partners are also showing caution too. 

“The Hotel Chocolat brand has huge resonance with shoppers and despite the macro-economic environment, people are still treating themselves with affordable luxury and remaining loyal and we are winning new customers who recognise our quality. Indeed over half of our Christmas gift range is priced between £2.50 and £8.50. 

“It goes without saying that the current environment is challenging on multiple fronts. Over the last few months we have taken decisive steps to reduce risk and to fully pull all our self-help Ievers in both our manufacturing and retailing businesses. One thing is for sure, we will never compromise on the brand standards and values which have built our following to this point. 

“We remain fiercely ambitious for the Hotel Chocolat brand for growth in both UK and international markets. Our new stores showcasing the format of the future opened in Norwich and Northampton and are trading very strongly. Internationally we intend to utilise more risk-contained techniques to capitalise on the proven brand appeal in major international markets. We will update on developments in due course.”

Ecommerce sales performance

Being “born digital”, Hotel Chocolat generates a relatively high proportion of sales online, which has been furthered by the shift in shoppers online during the pandemic.

Indeed, in FY2020 the retailer said that around 70% of sales were generated through UK digital, partners and “continuity products”. Its UK digital sales came in at £91.0m in FY2020, up from £37.1m the previous year.

As store sales rebounded in FY2021, UK digital sales decreased 13.% year on year, accounting for around 37% of sales.

Based on overall online sales running at the same level as in the UK, Prospect estimated that total online sales were around £81.0m in FY2021.

In FY2018 the proportion of sales online was 19% and sales through its own website had increased by 22%, reflecting investment in a more skilled and experienced team and the implementation of a number of upgrades that had been in the pipeline for a while. Subscription sales had reduced by 26%, reflecting a pause in acquisition marketing in this area as part of its remodelling plan.

Digital sales through third parties continued to grow strongly as the retailer continued to grow its partnership base.

Current financial year

H1 FY2022

Hotel Chocolat sales declined 9.2% year on year to £129.8m for the 26 weeks ended 25 December 2022 (H1 FY2022).

Pre-tax profit for the 26 weeks more than halved to £8.3m, down from £20.4m for the same period the previous year. EBITDA was £22m for H1 FY2022, versus £33.8m the previous year.

UK like-for-like store sales increased 7% year on year with average UK stores said to bring in revenues of more than £1m per year, “with almost all UK stores profitable”.

UK online sales decreased year on year as customers returned to stores, and also impacted by a lower year-on-year marketing spend. UK wholesale revenues were “lower than planned” because of cautious inventory management by online partners, as well as a focus on “quality over quantity” with fewer new partners being targeted.

Overall international sales dropped 69%, which the retailer stated reflected its “adapted approach”.

The retailer is six months into its three-year ‘shape of the future’ plan, which is intended to drive sustainable growth and benefit profit margins, operating overheads and inventory.

It described the current year as a transitional year and expects a return to sales and EBITDA growth for FY2023 and FY2024.

During the half, two new store formats were trialled in Norwich and Northampton, with further openings planned for later this calendar year and the retailer said it sees scope for an additional 50 stores over the next three to five years.

Hotel Chocolat co-founder and chief executive officer Angus Thirlwell said: “This strong sales performance from Hotel Chocolat stores, underpinned by our scaled database, is a result of hefty investments we continue to make into our brand. Investing in more cacao and less sugar in our recipes, funding nature positive cacao farming and championing British-made quality and design flair.

“Over the last three years, we have increased retail like for-likes by 25% through product innovation and improving the quality of our database marketing. “We have announced the opening of a further 50 UK locations over the next three to five years, with the first wave planned this Autumn.

“Our new ‘store of the future’ design has succeeded against its objectives in test locations and so will be rolled out in these new locations: more space, Velvetiser cafes and constructed from reusable and sustainable materials.”

He added: “Having grown sales by 66% since the start of the last pre-pandemic year, as previously announced, we are taking this year, over FY23, to sharpen-up our operating model before we embark on the next stage of growth. I am really pleased with the determination I have seen across our teams to get back to running a tight ship again.

“Our adapted plan for international growth – to pursue the proven brand appeal with low risk-low capex operating models – is making sound progress. In Japan, a new strategic partnership was signed and in the US our planning is looking encouraging.”

Christmas and half-year results for FY2022

Over the festive trading period, Hotel Chocolat sales fell 8% year on year for the nine weeks to 25 December 2022, with UK and Ireland sales falling 5% year on year. UK and Ireland retail like-for-like store sales were up 10% year on year for the period.

Online revenues declined over Christmas as people returned to stores and the retailer implemented a “deliberately lower marketing spend YOY”.

Hotel Chocolat stated that it had made “encouraging early progress” on its strategic plan. Within the UK market, its new store format and up-sized re-sites have performed strongly, which has resulted in “increased plans” for store estate growth in the UK over the next three years.

Internationally, its Japan licence deal announced in January 2023 “shows progress on capital-light strategies to optimise the proven brand appeal”. On a short-term basis, the brand expects to continue to report “temporary YOY reductions in international revenues from Japan and US whilst the adaptations to our strategy begin to take effect”.


Hotel Chocolat’s headcount has risen sharply over the past few years in line with the rapid expansion of the brand.

Staff numbers have almost doubled over the five years to FY2021 with the headcount coming in at 2,431 in that year.

Sales per employee moved above the £93,000 mark in FY2021, from a low of almost £82,000 in FY2020. 

Hotel Chocolat’s staff costs to sales ratio had been running at around the 27% mark over recent years before increasing to 31.4% in FY2020. It was reduced to a low of  was back down to 24.6% in FY2021. This remains a relatively high ratio but reflects the fact that Hotel Chocolat is a vertically integrated business that produces its own chocolate.


A third of the way into its 2022 trading year, Hotel Chocolat’s retail trading was said to be “in line with last year and online and wholesale sales softer yoy”.  

It described a “deliberately prudent approach to the outlook on trading, manufacturing controlled levels of seasonal inventory with a strong focus on self-help actions to mitigate inflationary pressures”, with plans  to continue focusing on full-price sales over discounting.

Reporting on its half-year results in January 2023, the retailer stated that FY2022 is a ”transition year towards an improved business shape” from FY2023 onwards. It anticipates consumers to continue to revert to stores for the second half of FY2022, ”which is advantageous to the brand because our stores are well invested to deliver an uplifting experience for customers”.

Hotel Chocolat said its remained cautious in the near term but more optimistic for the medium term. It stated that it was sticking to a “tight ship plan” and expected sales to return to growth in for FY2023 and 2024.

Prospect anticipates that Hotel Chocolat’s sales to continue to come under pressure as online normalises and the new Japan partnership beds in before returning to growth within a few year. Total sales are expected to edge closer to the £255m mark by FY2026.

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