Will Hotel Chocolat’s annual results leave a bitter aftertaste next Wednesday?
The chocolatier has had quite the time of it since floating last May. Bar a few dips, in the 12 months followings its IPO the company kept climbing, from an initial price of £1.49 to a high of £4.04 almost exactly one year later – that’s an incredible 170% rise, the latest UK retailer to find great success on the Alternative Investment Market (AIM).
However, since that peak the stock has struggled, the wider retail sector concerns dragging it to a 7 month low of £2.40 on 20th September. Hotel Chocolat Group PLC (LON:HOTC) now sits at a current trading price of £2.63.
Yet despite that relative rollercoaster performance, the company’s financials have consistently impressed. Back in January Hotel Chocolat stated that it was ‘quietly confident’ about 2017 having posted a 16.2% jump in group revenue (14.6% on a constant currency basis) for the 6 months to the end of December 2016. A large part of that came from a huge 80% surge in its festive hampers – not bad considering they cost between £50 and £500.
February’s interim figures maintained that strength, with pre-tax profit rising 27% to £11.2 million and revenue up 14% to £62.5 million. It also confirmed that it had opened 10 new stores during the period, while announcing its plans to expand its embryonic range of body butters and bath oils.
In July Hotel Chocolat then revealed a 12% rise in revenue to a better than forecast £104 million, its performance boosted by its new ‘Ice Cream of the Gods’ product countering the traditional summer dip in chocolate sales. More recently it announced it would be launching a small chain of shops in Hong Kong, its first attempt to expand out of Europe since its failed attempt to crack America a few years ago.
If Hotel Chocolat can translate that annual sales success into a healthy rise in profits – much like it did during the first half of the year – then there is no reason the stock can’t lift from its current lows.
Hotel Chocolat Group PLC has a consensus rating of ‘Hold’ with an average target price of £3.24.
Disclaimer: Spreadex provides an execution only service and the comments above do not constitute (or should not be construed as constituting) investment advice or recommendations, or a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any person placing trades based on their interpretations of the above comments does so entirely at their own risk. Spreadex Ltd is a financial and sports spread betting and sports fixed odds betting firm, which specialises in the personal service and credit area. Founded in 1999, Spreadex is recognised as one of the longest established spread betting firms in the industry with a strong reputation for its high level of customer service and account management.
In relation to spread betting, Spreadex Ltd is authorised and regulated by the Financial Conduct Authority. Spread betting carries a high level of risk to your capital and can result in losses larger than your initial stake/deposit. It may not be suitable for everyone, so please ensure you fully understand the risks involved. In relation to fixed odds, Spreadex Ltd is licensed and regulated by the Gambling Commission under licence number.