UK Markets closed

Hotel Chocolat to axe discounts for Christmas as profits melt away

<span>Photograph: David Kilpatrick/Alamy</span>
Photograph: David Kilpatrick/Alamy

Hotel Chocolat said it would be cutting back on discounts in the lead-up to the Christmas holiday season after swinging to an annual loss, but assured it was still on track for its busiest December yet.

The premium chocolate maker said it was planning for “reduced levels of discounting” and would sell more full-priced products, as it aimed for sales that focused on “quality over quantity” this month.

The company said it was confident shoppers would still spend their stretched budgets on “affordable luxuries”, including its Christmas gifts priced between £2.50 and £8.50.

It came as the company reported a £9.4m pre-tax loss for the year to June, after a series of one-off costs linked to the closure of high street stores in the US, as well as the restructuring of its joint venture in Japan. Those costs offset a 37% rise in revenue for the period to £226m.

Related: Do you chew your chocolate? Eat more than six squares? Enjoy it at night? You’re doing it wrong!

Analysts had been expecting Hotel Chocolat to report £9.6m in profit, up from £3.7m a year earlier.

The co-founder and chief executive, Angus Thirlwell, tried to strike a hopeful note, saying the plan to reduce cut-price sales was the right strategy for the business, which was still on track for a strong December.

“As we head into our busiest part of the year, I am confident that the strategic direction we have put in place will improve the prospects of the business for significant years to come,” Thirlwell said.

“Our decisions to focus on full-price sales and quality over quantity, coupled with a resurgence of physical store performance means that we anticipate December will be busier than ever.”.

He said that despite the deteriorating economic environment, with surging inflation reducing the spending power of households across the UK, people were still treating themselves and were staying loyal to the brand.

“The Hotel Chocolat brand has huge resonance with shoppers and despite the macroeconomic environment, people are still treating themselves with affordable luxury and remaining loyal and we are winning new customers who recognise our quality,” Thirlwell said.