Leonidas lost half of forecast earnings in first half

Leonidas lost half of forecast earnings in first half
© Leonidas

Chocolate retailer Leonidas saw its sales during the first half of the year stranded at a zero-growth €7 million, instead of the €15 million forecast, the company reports.

With the lockdown in March, Leonidas like other chocolate shops was allowed to remain open, but customers apparently saw their wares as less then essential, and stayed away.

The blow hit hard, because Easter is typically one of the most important periods of the year for chocolate, ahead of St Valentine and just behind Christmas.

We were on track at the beginning of March,” said CEO Philippe De Selliers, interviewed by financial daily De Tijd.

But the lockdown came at the worst possible moment, just before Easter, traditionally our best season after Christmas. The storerooms in our central warehouse and in our shops were full of fresh chocolates, which we suddenly couldn't get rid of.”

Leonidas counts its financial period from June to June, and had been reckoning on a doubling of profit from €7 million last year to €15 million from June 2019 to June 2020. Instead, the actual profit for the year remained at €7 million.

And the company was left sitting on hundreds of tonnes of product it could not give away, De Selliers said.

Leonidas pralines are largely made using butter and cream, and customers are advised to keep them in the fridge at home. That means they have a very short shelf-life.

The company’s network of retail outlets are 98% operated by franchise holders, but Leonidas still had to ensure they were compliant with local hygiene and safety standards, as well as keeping the chocolate moving.

We even supplied them with 200 tonnes of chocolate products for free,” De Selliers said. “That allowed them to keep their cash-flow up. We also donated a lot of pralines to our staff. But even then we had to destroy much of our supplies. It's all about fresh products. And we hardly sold anything until the end of June.”

One plus-side to the whole lockdown situation, however, was the discovery of online sales. Belgium’s chocolate retailers, for the most part, are extremely traditional in many ways, but necessity is the mother of invention, and customers who could no longer come to the shops demanded that the shops come to them.

Easter online sales exploded thirty-fold, albeit from a very low base, but the door has now been kicked open.

We learned a lot from that. In the next few weeks we will start with a double system: home deliveries and click and collect in our stores. But our webshop will never achieve more than 5% of our turnover. People love to come in person and choose a box of chocolates in person. That's the moment of pleasure.”

Alan Hope

The Brussels Times

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