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Britain's Hotel Chocolat Tackles Growing Pains As Profit Rises

British chocolatier Hotel Chocolat is making progress with supply chain improvements to address inefficiencies exposed by its overseas expansion, it said on Tuesday as it posted first-half profit growth of 7%.

Shares in the group jumped more than 9% by 10:20 GMT, extending gains over the past year to 38% and valuing the company at £492 million (€588.7 million), after it also said that trading this year has been in line with expectations.

Hotel Chocolat had cautioned in January that it had incurred higher costs in delivering second-quarter revenue growth of 11%, citing challenges in its supply chain as it expanded in the United States and Japan.

Overseas Operations

It pledged to address the issues in 2020, adapting its model from one focused on the UK to one also supplying overseas operations.

"We are now making good progress with investments and upgrades in our supply chain, which will fully address these inefficiencies and increase our international and multi-channel supply capability," the company said on Tuesday.

The luxury chocolate maker, retailer and wholesaler made a pretax profit of £14.9 million (€17.8 million) in the 26 weeks to 29 December, up from £13.8 million (€16.5 million) a year earlier. Revenue was up 14% at £91.7 million (€109.72 million).

New store openings contributed three percentage points of sales growth, with the balance coming from existing locations, digital and wholesale channels.

Leap In Sales

Co-founder and chief executive Angus Thirlwell, who owns 32% of the shares, highlighted a 200% leap in sales of the company's Velvetiser in-home hot chocolate system and a 120% jump in active VIP members to 1.1 million.

Official data published last week showed that British shoppers started spending again at the start of the year after a sluggish end to 2019, adding to signs that improved sentiment since December's national election is translating into stronger economic activity.

Hotel Chocolat, which is outperforming the wider UK retail market, ended the period with 125 British locations, four in the United States and five in Japan. It maintained its interim dividend at 0.6 pence.

News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.

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