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  • Writer's pictureMark Watson-Mitchell

Hotel Chocolat – Update disappoints but broker says now is the to buy, shares now 160p down 15p

This is one company that I like very much.


Its product and retail range is almost unique.


And after recent upsets its management keeps on trucking away at re-shaping its business.


Trading Statement


This morning’s Trading Statement updated investors on its recent seasonal trading as well as its strategic progress.


The group now expects its sales for its end June 2023 Trading Year to be slightly lower than market expectations, while it guides that its underlying pre-tax profit will be around the breakeven level.


The Business


The group is a premium British chocolate maker with a strong and distinctive brand.

The business, which was founded by Angus Thirlwell and Peter Harris, who are still executives within the company, has traded under the Hotel Chocolat brand since 2003.



It floated in 2016.

The group considers itself to be unusual in being a grower (organic cacao farm in Saint Lucia), a manufacturer (in Cambridgeshire) and owning its extensive direct to consumer channels (branded stores, websites).


CEO Angus Thirlwell stated that:


"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.


We are very grateful to our growing base of loyal and new customers, who are signalling that ethical and higher cacao premium chocolate is definitely worth it."


Analyst Opinion – now is the time to Buy


Analyst Wayne Brown, who has a 300p a share Target Price out currently, rates the shares as an immediate Buy.


His estimate for the 2023 finals is £203m (£226m) in sales, while pre-tax profits will collapse to £0.2m (£21.7m).


For the coming year to end June 2024 he goes for a rebound to £224m revenues and £18.5m profits, worth 10.1p per share in earnings.


He sees the company doing even better next year with £235m takings and £30.7m profits, generating 16.7p in earnings per share.


Conclusion – yes, these shares are for buying


Valued now at £230m this group really is quite a special ingredient for most High Streets across the country.


Its shops and cafes are different and they really attract.


Give it some time and I do believe that its management will start to really show some cracking figures.


The shares at 160p could quite quickly break upwards again through the 200p level.


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