•  Thorntons FY sales up 3.5%
  •  Commercial sales rise 21.5%
  •  Retail sales drop 8%
Thorntons retail sales down on store closures

Thorntons retail sales down on store closures

UK chocolateer Thorntons saw sales at its commercial division rise by more than one-fifth during fiscal 2013, more than offsetting declining retail sales as the company increases its commercial focus.

In a trading update this morning (15 July), Thorntons said that total sales in the 12 months to 29 June increased by 3.5% to GBP221.1m (US$332.9m).

Gains were driven by a strong performance from its commercial business, which primarily sells Thorntons branded chocolate through third-party retailers. Commercial sales rose 21.5% to GBP101.2m. During the 12 months, the group was able to further develop the relatively new revenue streams of international and private label, which expanded by 56% and 385% respectively.

The company has looked to refocus its operations on the commercial model, reducing its reliance on its retail sales by closing unprofitable outlets. Thorntons closed 34 company-owned stores during the period. Retail sales were down 8% in the period, declining to GBP119.9m.

Thorntons said that it anticipates full-year profit before tax and certain other items to come in ahead of market expectations. Currently, consensus estimates put PBT at GBP46m. 

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Thorntons today reports its fourth quarter trading update for the ten weeks up to and including 29 June 2013, which demonstrates further progress in transforming the business. As this quarter is a ten week period (last year nine weeks), the figures for 2012 have been adjusted to allow comparison. Total sales – Increase of 5.6% to £26.8 million.

Commercial (FMCG) Division – Continued strong growth in the Commercial division which will become Thorntons’ largest division by the end of the current financial year in line with the strategy to rebalance the business. The prospects for the International channel continue to be encouraging, although currently still a small proportion of overall sales.

UK Commercial sales grew by 11.8% to £9.2 million. International sales more than doubled to £0.9 million. Private label sales increased to £0.7 million.

Retail Division – Showed good progress towards the objective of creating a sustainable retail estate of 180-200 stores. The period saw positive like-for-like sales in Own Stores, a trend also reflected in the Franchise channel. Own Store like-for-like sales increased by 0.5%. Overall sales in Own Stores declined 3.8% to £13.9 million as a result of the 34 store closures during the year, in line with the Company’s strategy. Franchise sales improved by £0.2 million to £1.3 million.

Thorntons Direct sales decreased by £0.1 million to £0.8 million.

As announced on 2 July 2013 we anticipate profit before tax, impairment and onerous lease charges for the full year to be ahead of current market expectations.* * Current market consensus is £4.6m

Jonathan Hart, Thorntons' Chief Executive, commented: “I’m pleased to report further encouraging progress during the final quarter of our financial year. Despite being our smallest sales quarter we have continued to demonstrate the positive impact of our strategy and the strength of our brand. “Our UK Commercial sales growth and market share remain strong and our Own Stores have now delivered positive like-for-like growth across the whole of the second half of this year. We are on track with our store closure programme and have refurbished seven stores to our new format in the period under review. “The trading environment continues to be challenging. The actions we have taken are delivering positive results reflected by the progressive recovery in our profitability over the past 18 months.”

Original source: Thorntons