The drop in Thorntons’ own-store sales has come due to consumers buying chocolates from supermarkets rather than in the UK chocolate maker’s own outlets, its chief executive has told just-food.
In a half-yearly trading update today (13 January), Thorntons said own-store sales fell 4.5% to GBP51.7m (US$84.1m) in the 14 weeks to 9 January.
Christmas is a key trading period for Thorntons and like-for-like sales declined by 4.4%, although the company said it benefited from higher gross margins.
Thorntons’ chief executive Mike Davies told just-food that the drop in own-store sales had resulted from “channel switching” by consumers.
He added: “The customers that are actually coming in just for a box of chocolates are buying it in a supermarket rather than buying it in our own stores. That explains the reduction in our own stores, but bear in mind that sales to supermarkets grew by 42%.”
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By GlobalDataFranchise sales for the period also declined, sliding 18.1% to GBP5.3m. However, Davies insisted that gaining 24 stores with new franchisees was “pretty good going”.
“We lost 94 stores when Birthdays went into administration in May. We had an active programme to replace those stores and in the year we actually opened 24 stores. Up until now we’ve opened 70 of the 94 stores in seven months,” Davies said.
The Thorntons boss said the firm remained focused on a target it set last year to reduce the company’s financial dependence on Christmas.
“If you go back historically, Thorntons has lost a lot of money in the second half of the financial year and made a lot of money in the first half. If you look at the progress we’ve made over the last few years, you will see a significant improvement or reduction in the losses made in the second-half, so evening out the profit contribution,” he said.
“We still make a lot more money in the first half and we still, last year, lost GBP600,000 in the second half but that was down from GBP7m just a couple of years before.”
Davies added that innovation remained a “real cornerstone” for the company and leading into Valentines, Mother’s Day and Easter, it has “completely refreshed” its ranges.
“There are lots of new ideas, so innovation is key and working very well for us,” Davies insisted.