Yesterday’s trading session saw Hotel Chocolat’s share price plummet by 44 per cent. On Monday, the share price closed the trading session at 235p. However, yesterday’s trading session started with a huge bearish market gap of 22 per cent after the company opened the markets trading at 180p. The share price would later drop by a further 27 per cent to close the markets with a value loss of 44 per cent.
Part of the reason we have seen such a drastic drop in Hotel Chocolat’s share price is due to the company’s setbacks in its overseas operations. According to reports, the company decided to close all its US-based stores, which saw it take a £3 million hit.
Reports also indicate the company is considering closing some of its businesses in Asia, especially Japan. Such a move will see the company write down the value of a £23 million loan from its underperforming Japan business, a move expected to affect its bottom line. The company has also warned it will be posting a statutory loss for 2022 after the move to close overseas businesses.
It is important to note that, despite the losses overseas, the company has continued to perform well in the UK. According to reports, the group’s turnover has increased by 37 per cent year-on-year to £226 million in fiscal 2022. Annual sales are also 70 per cent ahead of pre-pandemic turnover in 2019.
The company has also indicated that its UK business is expected to continue growing strongly and beat sales expectations. Its co-founder and chief executive, Angus Thirlwell, also noted that they expect to meet underlying profits for the financial year 2022.
Therefore, following the past 24 hours’ price action, my Hotel Chocolat Share Price analysis expects the prices to continue dropping in the next few trading sessions. Even before yesterday’s 40 per cent drop, the share prices were already struggling for months.
The drop in the coming trading sessions is likely to see the Hotel Chocolat share price trade below the 100p price level. There is also a high likelihood that the current bearish trend will be long-term.
This post was last modified on %s = human-readable time difference 10:07