UK: Thorntons "cautious" despite improved Q4 sales
Like-for-like sales from Thorntons own stores increased but franchise sales were down
UK confectioner Thorntons has maintained a cautious outlook, despite seeing some improvement in sales trends during the fourth quarter.
The company, which sells chocolates through supermarkets as well as its own and franchised stores, said today (11 July) total sales for the nine-week period to 30 June rose 7.8%.
Like-for-like sales from Thorntons' own stores reversed their recent decline, gaining 0.7% in the period. Commercial sales through retail channels trebled as they were boosted by product launches. However, franchised store sales were hit by the collapse of the Clinton Cards chain.
Thorntons has been plagued by a run of poor results and profit warnings. In a bid to improve profitability the firm embarked on a restructuring programme that will see it close a total of 180 owned stores.
The company hopes to reduce its reliance on this revenue stream by upping its focus on franchised stores and its commercial arm. However, there are those who would warn that by becoming just another name on a supermarket shelf, Thorntons is at risk of devaluing the brand and therefore inhibiting its ability to charge a price premium.
CEO Jonathan Hart said he was "encouraged" by the result but said the chocolatier remained "cautious" on the outlook for the remainder of the year.
Click here for coverage of Thornton's conference call with analysts on its fourth-quarter sales.
("Thorntons" or "the Company")
FOURTH QUARTER TRADING UPDATE
Thorntons PLC today reports its fourth quarter trading update for the nine weeks up to and including 30 June 2012, which is in line with management expectations. The comparative numbers for the fourth quarter in 2011 are restated on a nine week basis to allow like for like comparison as that period only had eight weeks.
Total sales for the nine weeks increased by £1.8 million to £24.7 million, an improvement of 7.8%.
Commercial sales grew by £2.9m to £9.3 million, due to the introduction of this summer's 'Best of British' range and some differences in the timing of deliveries to our Commercial customers.
Own Store like for like sales increased by 0.7%. Overall sales in Own Stores declined
£0.7m to £13.7 million as a result of the 36 store closures during the year, in line with the Company's strategy.
Franchise sales declined to £0.9 million. Sales were adversely affected by the
administration of Clinton Cards Plc. Thorntons had franchises in 30 Birthdays stores and 16 Clinton Cards stores.
Thorntons Direct sales were broadly flat at £0.8 million.
We anticipate profit before tax, impairment and onerous lease charges for the full year to be in line with our expectations.
Jonathan Hart, Thorntons' Chief Executive, commented:
"Although we are encouraged by this performance, this nine week period contributes less than 12% to our annual sales and we continue to remain cautious about the outlook for the coming year. Trading initiatives in our Own Stores, implemented since our strategic review, combined with new product launches have led to some improvement in underlying sales. Within the Commercial channel sales have been supported by the incremental benefit of this summer's 'Best of British' range and timing of deliveries to our customers.
"We remain committed to our strategy of rebalancing our business, revitalising our brand and restoring profitability and I am pleased to see that the actions we have taken are starting to deliver improvements in a difficult trading environment."
Original source: Thorntons
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