UK chocolate maker Thorntons remains positive about its prospects and confident in its strategy despite reporting annual losses this morning (7 September).
Earlier today, Thorntons booked a pre-tax loss of GBP1.1m (US$1.75m) for the year up to 25 June, compared to a pre-tax profit of GBP6.1m in the same period last year.
Thorntons moved into the red due to costs linked to a restructuring programme announced in June. The company said it planned to close up to 180 outlets because of changing shopper habits and a struggling UK high street. It said it would use franchisees to replace the bulk of the closed stores and also announced it would develop its commercial arm, which sells product to UK retail chains.
Speaking to reporters after the announcement of Thorntons’ annual results, chief executive Jonathan Hart said the changes are necessary if the firm, which celebrates its centenary this year, is to prosper.
He said: “We will be undertaking this transformation in the face of economic headwinds but we believe our strategy is right for the company and, indeed, for the times we find ourselves in.”
Hart pointed to a growth in production volumes as an indicator that the business is heading in the right direction. He said: “We have grown volumes by 5% and maintained flat production costs. Our plan is to rebalance sales into our franchises but also into our commercial channels. Our customer can buy our products any way they want to without us compromising manufacturing capacity.”
Thorntons increased its revenues by 1.7% to GBP218.3m thanks to sales from its commercial channel, which were up 25.9% to GBP78.8m.
Hart said that the upcoming Christmas season had so far seen “encouraging” forward orders. Thorntons’ new products include the introduction of smaller chocolate gifts that are under GBP5, which Hart said are ideal for younger customers looking for a present for family or friends.
Thorntons is also introducing three-for-two promotions and an ‘early bird’ offer, which incentivises customers to buy in advance for Christmas. “We have a strong Christmas seasonal offering which we have built upon for 2011,” Hart said.
Looking further ahead, the Thorntons chief admitted that the next year is likely to be turbulent but said he feels the company is now better placed and leaner to ride out the still-struggling economic climate: “We have strong sales and a strong and trusted brand with excellent potential. I remain confident we have the right plan to keep sustainable growth in the future.”