On the money: Thorntons insists focus on NPD driving gains
UK confectioner Thorntons today (11 July) insisted its focus on innovation and product development has driven gains both through its namesake stores and its commercial arm.
Earlier this morning, the company said total sales for the nine-week period to 30 June rose 7.8%.
Gains were driven by a strong showing from its commercial arm - which sells into retail and wholesale channels - where sales were up 42.6%. Thorntons said the timing of deliveries had a positive impact on commercial sales during the period.
A spokesperson for the firm told just-food the group has been "encouraged" by like-for-like growth at its owned-stores, where comparable sales were up 0.7%.
Franchise sales dropped dramatically during the period because they were adversely affected by the closure of Clintons Cards and Birthdays outlets. However, the spokesperson revealed that comparable sales trends at franchise stores were positive.
"Stripping out the closure of Clintons and Birthdays trends at franchised stores were similar to those seen at owned-stores. There has been an improvement in sentiment since Christmas," the spokesperson said.
Sales gains have been driven by NPD and innovation, the spokesperson suggested. During the quarter, Thorntons introduced a Best of British line to coincide with the Jubilee celebrations. The group also rolled out Little Gifts and Alphabet Truffles.
Sales at its own and franchised stores were also boosted by "better merchandising" and efforts to improve and differentiate the in-store experience for consumers, the spokesperson added.
In its stores, Thorntons has focused on offering personalised products as it looks to draw consumers in and convince them to pay a slight premium for Thorntons-branded products that could otherwise be bought through supermarkets.
In spite of efforts to differentiate its retail offer, Conlumino MD Neil Saunders suggested the firm is moving away from its premium retail offer, a process that he claimed is necessary in order to return thee group to profitability.
"Thorntons is fast moving away from being a retail brand and is becoming much more of a mid-market player in terms of positioning. These adjustments are causing some short-term pain to the business but are a necessary adjustment for long-term survival," Saunders wrote in a note to investors.
Saunders said any "enthusiasm" caused by improved like-for-like store sales should be "tempered by the fact that underperforming stores are gradually being shut leaving a rump of more successful shops where trading is stronger".
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