Chocolate products retailer Hotel Chocolat (LON: HOTC) has been a big success on AIM. The share price has risen from 148p to 353.5p since the flotation in May 2016. On Wednesday management will be publishing a pre-close trading statement.
In reality, there should be no significant surprises because the first half is the most important, because it includes Christmas. Hotel Chocolat remains a strong brand.
Interim revenues were 13% ahead at £80.7m and full year revenues are expected to improve from £116.3m to around £130m.
The profit is made in the first half so the reported full year pre-tax profit is expected to be slightly lower than the interim figure at around £13m, up from £12.7m. This profit is being held up by initial costs of moving into new territories.
Capital investment in new sites, including in the US and Japan (with a joint venture partner), could have pushed Hotel Chocolat into a modest net debt position. The interim dividend was maintained at 0.6p a share and the total dividend may be kept at 1.7p a share.
The company is developing new products, such as drinks and ice cream, and formats are evolving.
Management believes that its products are value for money and better than the competition in international markets such as the US. Management has learnt from previous problems with international investment.
The return for the international investment will take time to show through. More stores are planned in the US and Japan this year, but there is no large scale roll-out just yet.
Management is improving its gathering of information about customers via its VIP Me card. More UK stores are being opened.
In the year to June 2020, pre-tax profit could improve to £14m and with international operations improving their return the figure could increase to £17m the following year.
The shares are trading on a hefty 40 times 2018-19 earnings, so there is little for investors to go for in the short-term. Only a long-term investor would get any value at this share price.