UK: Thorntons shares spiral after weak Q3 sales
Thorntons shares dived after a disappointing sales performance in Q2
Chocolatier and retailer Thorntons today (12 January) saw its share value plunge to its lowest-ever level after announcing quarterly sales below expectations.
Shares in Thorntons dropped 17.52% to 11.65p at 10.12 GMT after the company reported a second-quarter sales increase of 0.6%.
For the 14 weeks to 7 January, the company's total sales were GBP83.7m (US$128.4m). Thorntons' commercial sales, which include products sold in supermarkets, increased by 16.9% to GBP29.2m.
However, sales from its own stores were down 6.8% and sales from franchise stores were down 17.5%. Like-for-like sales from own stores were down 4.2%. However, like-for-like sales from Thorntons' own stores fell 7.8% in the first quarter.
Jonathan Hart, Thorntons' chief executive, said the 0.6% increase in total sales was "below our expectations" but noted that Thorntons had "sold more chocolate in the quarter than ever before".
He said "cost-conscious consumers" and high levels of promotional activity had hit margins, which Thorntons had signalled last month when it issued a profit warning.
However, Hart said he was confident the company can become more profitable over the next few years.
"We expect continued weakness in consumer sentiment throughout 2012. This reaffirms our strategy to rebalance the business, create a smaller retail estate, revitalise our brand and, most importantly, restore profitability over the next three years."
However, Haakon Helgesen, retail analyst at Conlumino, said the update was "disappointing" and argued Thorntons must decide if it is a retailer or a manufacturer and wholesaler.
He said: "The fact that store sales are down so strongly against a very weak comparative last year demonstrates the extent to which there is no particular reason for consumers to visit Thorntons' shops when the products are readily available from supermarkets. The priority for Thorntons is to determine what it wants to be, rather than trying to be all things to all men."
The company, meanwhile, also announced that Michael Killick has been appointed finance director and director of the company when Mark Robson leaves in February.
Thorntons has booked a drop in third-quarter sales as store closures and a difficult trading environment dented the chocolate group's result....
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