Thorntons reported "disappointing" Q2 sales from its FMCG division

Thorntons reported "disappointing" Q2 sales from its FMCG division

Thorntons has booked an 8% drop in half-year sales on the back of "challenges" with some retail customers.

The company posted an 8.2% fall in sales to GBP128.2m (US$194.3m) for the six months to 10 January.

Thorntons said its FMCG division, which does business with the UK's largest supermarket chains, saw sales fall by 11.2% to GBP62.7m.

Citing data from Nielsen, Thorntons said its "overall market share of Christmas" - which the company described as sales of boxed chocolates and seasonal specialities - fell from 8.4% a year ago to 7.3%.

Thorntons pointed to "challenges experienced in a couple of major grocers combined with short-term difficulties at our new centralised warehouse".

"We were disappointed that the continued growth we anticipated in the UK commercial channel of our FMCG division had not been delivered. The challenges we experienced within specific grocers accounted for the majority of the share decline," CEO Jonathan Hart said.

The results underlined a profit warning from Thorntons just before Christmas, when it iindicated it was facing challenges including a reduction in orders from supermarkets, as well as supply disruption due to problems at the Derbyshire depot.

Like-for-like sales from Thorntons' own retail stores were up 2.2% thanks to a 5% increase in the second quarter.

Investec analyst Nicola Mallard, who has a 'buy' rating on Thorntons' shares, said: "A setback in revenues in Q2 is disappointing, but should not be interpreted as a failure of the group's strategy. Whilst FMCG was weaker than hoped, this was only in two particular customers, not across the board, and retail numbers were very good and an indication of consumers' continuing regard for the brand."

Matthew McEacheran, an analyst at N+1 Singer Equity Research, said sales from Thorntons' FMCG division are "still heavily reliant" on the major UK grocers but added: "Other grocery customers delivered good growth and, alongside strong retail demand, this seems to confirm the benefits of the improved offer and strengthening brand perceptions."

Nevertheless, McEacheran said his forecasts for the business were under review as he assesses the outlook for the company.

"The key question for investors is whether or not ordering patterns, in certain grocers in particular, revert to normal and if so when" he said. "In the absence of this happening forecasts will effectively have to be rebased whereas if orders patterns were to bounce back there could be scope for forecasts to revert back to previously assumed levels in coming periods."

Shares in Thorntons, which fell almost 20% on the day of the profit warning last month, had risen 3.48% to 81.75p by 14:00 GMT.