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Thorntons Continues Its Turnaround Mission, With Sales And Pre-Tax Profit Up

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THORTONS TURNAROUND 2013
Thorntons sees some early indications that its new strategy is paying off, as sales and pre tax profits rise | Getty Images

Chocolatier Thorntons is continuing its mission to revive its struggling fortunes, and reported a slight sales increase of 2.9%, edging sales up to £133.7 million.

UK commercial sales helped drive the performance, soaring 16.1% to £51.8m in the 28 weeks to January 12, but retail sales dropped 8.3% as a result of the recent store closures it has rolled out across the UK.

Franchise sales were also hit by Clintons falling into administration in May 2012, leading to a drop in sales of 25.4% .

However, Thorntons' online sales also fell by 11.9% to £5.9m - Thorntons blamed this on the late deployment of its new website and operational issues during peak trading.

More positively, overseas sales rocketed 57.7% to £4.1m while sales of private label increased from £800,000 to £3.9m.

Thorntons chief executive Jonathan Hart said he was encouraged by its first half performance. "This demonstrates that our strategy is generating results as we continue to rebalance the business, revitalise the brand and restore profitability," he said.

"Our customers have responded positively to our increased focus on innovation, value and service and our market share has grown further. This reflects the continued strength of the Thorntons brand across our multi-channel distribution model."

Company Watch's business analyst Nick Hood told the Huffington Post UK that Thorntons was progressing well, and that its latest announcement represented "a strong swing back towards something like meaningful profitability and genuine revenue growth, despite tough market conditions".

However, he warned the retailer still suffered from persistent issues with its balance sheet. "Net debt has risen and remains stubbornly above financial norm, while a marginal working capital profile is still depressing the overall financial rating," he said.

"But it will certainly be a step in a more positive direction if management can deliver a profit, however small for the full year."

Investec Securities was also impressed with Thorntons' work so far, noting its pre tax profit lift from £3.1m to £5.3m was "a good performance and further evidence that the strategy is working".

Analyst Bethany Hocking added: "Easter remains key: Trading since the 19 January statement has been in line with expectations. As ever for Thorntons, trading over Mothers' Day and Easter will define the full year outcome."

Last year, the Huffington Post UK interviewed Hart about his turnaround plans, including the shift away from high street stores and the revitalisation plans for online, franchise and commercial sales.

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