Chocolat Melting, Fevertree Losing Fizz, Paypoint Results and PM Choice

The share price of Hotel Chocolat (HOTC) collapsed yesterday after posting a trading update. It was not that chocolate sales had fallen in the heat wave as one might expect. The temperature nudged 40 degrees C in the leafy Chislehurst suburbs yesterday and I cancelled a trip into the City which was probably a wise move.

HOTC said “While the Board anticipates underlying FY22 profit before tax will be in line with market consensus, statutory reported profit for FY22 is
expected to be a loss, being affected by the outcomes of an internal business review, predominantly as a result of non-cash impairment provisions and costs arising from discontinued activities including the closure of retail stores in the USA”. It’s a loss however you look at it.

The share price of HOTC peaked at about 530p last November and it’s now about 130p. Investors who signed up for the placing at 355p last July must be kicking themselves.

I must admit to a certain scepticism about “comfort” food sellers particularly those targeting the luxury end of the market. The history of chocolate and ice cream sellers is very poor and I would extend that to premium alcohol brands such as gin and wine. Likewise premium mixer seller Fevertree (FEVR) whose shares fell by 30% last Friday after warning on margin erosion due to higher glass and freight costs combined with labour shortages. These kinds of companies depend on aggressive marketing to grow sales but their products and marketing can be imitated. When consumers become price sensitive they may quickly switch to cheaper brands.

Needless to say, I do not hold the stocks mentioned above.

One share I do hold is Paypoint (PAY) who issued a positive trading statement this morning. It included this statement:

“Q1 Progress: Good progress against our ESG programme, including commitment to ensure all employees are paid a minimum of the Real Living Wage delivered in July 2022; and Inaugural Pride Month programme launched in June 2022, as part of our ‘Welcoming Everyone’ activities, providing educational content, further meetings of our LBGTQ+ network and events to bring colleagues together, building on our commitments to diversity, equity and inclusion and supporting our vision to create a dynamic place to work”.

They have clearly become enamoured of the need to support lesbian, gay, bisexual and transgender (LGBT) individuals but I am not personally convinced that this is an area in which companies should be interfering. Next thing we know they’ll be promoting religion and holding prayer meetings.

One of the last three candidates for Prime Minister, Penny Mordaunt, has been criticised for calling that old TV series of “It Ain’t Half Hot Mum” as being misogynistic and homophobic. It certainly was but it was also comic as the characters were true of their era. Likewise in Dad’s Army written by the same authors which could also be criticised for being prejudiced. But as my father served in the Home Guard and kept a diary during the war years, I think it was a good representation of reality. He skived off a lot apparently and considered it a waste of his time.

Will Penny Mordaunt beat Liz Truss to make the final poll? I hope so as I don’t think Truss could win a General Election for the Conservatives. Simply not enough charisma.  I still think Rishi Sunak is the best candidate.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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