The net proceeds will be used to double the firm’s capacity to support revenues of up to around £500 million by expanding its factory footprint to 160,000 square feet.
This follows relatively quickly on the heels of a £22 million placing in March 2020 which was used to increase the size of the factory to 80,000 square feet from 45,000 square feet.
The company said its ambition to become a global digital-led brand has the potential to generate a ‘materially higher’ compound annual growth rate.
SUPPORTING HIGHER GROWTH POTENTIAL
Since the pandemic Hotel Chocolat has experienced a dramatic shift towards digital, subscription and partner led sales which now represent over half of revenues up from a third in 2019.
The company believes that the new sales mix has greater growth potential and is more reliable with a higher customer lifetime value than physical store sales which are more impulse driven.
If the recent step up in growth was sustained with year-on-year revenues to 27 June growing 21% to £165 million, the company said it would have exceeded existing capacity within three to four years.
Consequently, the board believes that the placing will provide the flexibility to invest in plant capabilities to match evolving demand patterns and allow it to capitalise on future growth opportunities.
The firm also announced a new revolving credit facility of £30 million which replaces a £25 million government coronavirus large business interruption loan scheme which was never drawn.
Today’s placing represented around 9% of the company’s existing share capital.