On the money: Thorntons sees strategy bearing fruit
CEO Hart upbeat on Thorntons progress
Thorntons' improved first-half performance demonstrates that its strategy to shift towards sales through its commercial arm while working to revitalise the brand is starting to pay off, the group insisted this morning (25 February).
Commenting on the six month trading period that saw Thorntons net income rise by almost one-half, the chocolate maker's chief executive Jonathan Hart said he was "encouraged" by the group's "overall progress".
During the six months, Thorntons booked a 2.9% increase in revenue. Gains were driven by the group's commercial arm supplying UK retailers, where revenues increased 16.1%. Speaking to journalists during a conference call, Hart said that retail customers have "responded positively" to Thorntons' increased focus on product development.
As Thorntons increases its focus on sales through retail customers, it has shuttered underperforming company-owned stores. Thorntons closed 13 outlets in the half, contributing to the firm's 4.3% reduction in operating costs. Hart added that the firm remains "on track" to close 40 stores this year.
Moving into the spring and summer season, which includes key trading events such as Easter and Mothers' Day, Thornton's is preparing to refresh its branding. "All of our spring season products are set for a refresh... which is actually a precursor to a more comprehensive brand refresh that will start to be obvious to our customers this summer," Hart revealed.
The new brand identity Thorntons is developing is part of its move to target "year round gifting", he added. It will include an "over-arching" marketing push called "101 reasons to make someone smile". The campaign will highlight the varied reasons that consumers might have for gifting a box of Thorntons chocolates - from "I love you", to "thank you" and "congratulations" as well as "more traditional" birthdays and anniversaries, Hart said.
Thorntons has also launched a new boxed chocolate range, called "today I thought of you". "They are designed to deliver year round gifting sentiment... [and have been] well received thus far by our commercial customers," Hart suggested.
"The new brand identity you can start to see... but more importantly than that we are undertaking a comprehensive review of all our ranges creating clear platforms," Hard said. "This will bring together what has been quite a kaleidoscope of our sub-brands."
While Thorntons endeavours to reposition itself to deliver year-round sales, the company's present performance is largely determined by its trading over key seasonal events, such as Easter and Mothers Day, Investec analyst Bethany Hocking emphasised.
"[This was] a good performance in our view and further evidence that the strategy is working," Hocking suggested. However, she added: "As ever for Thorntons, trading over Mothers' Day and Easter will define the full year outcome."
Looking to Easter, Hart was upbeat on Thorntons prospects. He said he is "encouraged" by orders placed so far, adding that the chocolatier has "strong plans across all our channels" with "our strongest ever line up of new products".
"We use the seasons, where we are clearly very famous, to show that we can deliver other gifting products throughout the year," Hart added.
Shares in the confectioner were up 9.14% at 1.30pm (GMT) as investors responded positively to the progress Thorntons has made.
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