Shares plummet in Hotel Chocolat after second profit warning in two months
The business said its cost-cutting efforts were going well but taking longer than expected.
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Your support makes all the difference.Shares in Hotel Chocolat plunged on Friday as the company warned on profits, which were already expected to be slender this year.
The company said it is on a mission to “reshape the business” as it tries to set itself up for growth in the future.
It is the latest profit warning, the second in just two months, from the chocolate retailer, which has been struggling with faltering business in recent years.
Easter – a key moment for any chocolate seller – saw sales “lower than expected”, the business said during its first profit warning.
While excellent progress has been achieved on cost base efficiencies, they are materialising later in the year than initially anticipated
The reason? It could simply not keep its shelves stocked, so customers could not buy even if they wanted to.
On Friday the business said it is making “excellent progress” in cutting costs, but that it will be slower than previously thought.
It means that even though sales are as expected, the company now expects to report a loss for the 2023 financial year.
It did not say how big this loss is expected to be.
Analysts had previously thought that the company would make a £300,000 underlying pre-tax profit. Revenues were expected to be £201.8 million.
Profits next year will also be lower than expected, it added.
Hotel Chocolat said: “As previously announced, the 2023 financial year is a transition year to reshape the business in readiness for its next stage of growth.
“While excellent progress has been achieved on cost base efficiencies, they are materialising later in the year than initially anticipated.
“As a result, although sales are in line with market expectations, the group now expects to deliver an underlying marginal loss before tax for the 2023 financial year. Cash generation remains healthy with cash at hand of £19 million and zero debt.
“For the 2024 financial year, the group expects sales and underlying profit before tax to be lower than current market expectations due to ongoing weakness in consumer sentiment and continuing inflationary pressures.”
Shares fell around 12% on Friday morning.