UK: Restructuring costs force Thorntons into the red
Thorntons retail sites are struggling but commercial sales soar
UK chocolate retailer and manufacturer Thorntons has reported an annual loss due to costs linked to the company's restructuring.
The company booked a pre-tax loss of GBP1.1m (US$1.75m) for the year to 25 June, compared to pre-tax profits of GBP6.1m in the same period in 2010.
A jump in sales was not enough to offset one-off costs, which amounted to GBP5.4m because of the company's restructuring, outsourcing of the warehousing and distribution functions and bank refinancing. Pre-tax profits excluding the exceptional items fell to GBP4.3m from GBP6.9m last year.
Revenues increased by 1.7% to GBP218.3m thanks to sales from Thorntons' commercial business, which sells the company's products through supermarkets and other retailers. Commercial sales increased 25.9% to GBP78.8m.
In June, the chain announced it was looking into closing up to 180 outlets because of changing shopper habits and a struggling high street.
Jonathan Hart, Thorntons' chief executive, said: "In the year that marks the centenary of Thorntons, I am pleased to report record overall sales, despite the challenging retail environment. This highlights the strength of our multi-channel strategy, as well as that of the Thorntons brand, with sales of branded products rising by 2.2%.
"As announced at the time of our strategic review, our goal over the next three years is to rebalance the business and to create a profitable and sustainable retail estate. While we expect to see the weakness in High Street footfall and consumer spending to continue through 2012, we are confident that this strategy is right for the company."
However, chairman John von Spreckelsen admitted that challenges remain for the upcoming year.
He said: "We anticipate that the weakness in footfall and consumer sentiment experienced through our Own Store and Franchise channels during the first half of 2011 will continue at least into 2012. We are, however, looking forward to another strong year of growth in our Commercial channel as we gain further distribution and market share."
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