Profits crash as Thorntons relies on promotions to shift chocs
Profits at Thorntons tumbled over the past six months as the confectioner resorted to selling more chocolate on promotion.
Pre-tax profits in the 28 weeks to 7 January slumped to £618,000, down from £8.3m in the previous year.
Thorntons said gross margins had dropped four percentage points to 42.5% as a result of selling more promotional lines and shifting the sales emphasis from its own stores to other retailers.
Also as a consequence of own store sales falling short of expectations over the period, Thorntons incurred gross impairment and onerous lease charges of £2.4m.
Thorntons CEO Jonathan Hart said the results reflected the need for the company to stick to its strategy of building sales through other retailers while reducing the size of its own retail estate, which he said would still remain “an important shop window for the brand”.
Thorntons closed 20 stores over the most recent trading period and has earmarked at least 120 stores for closure over the next three years, leaving an estate of between 180 and 200 stores.
“We are pursuing our chosen strategy and have made good progress in implementing it while weathering a difficult market,” said Hart. “These results and the economic climate only reaffirm the need for change.”
Readers' comments (4)
Anonymous | 15 Feb 2012 13:23
Sadly Thorntons have sold their soul to the likes of Tesco and the greed and draw of increased volume was too much.
Whenever anyone now receives a box they know it was half price, with chocolates that are also half the taste that they once were.
Do the decent thing Jonathon and pull Thorntons out of Tesco before it is too late for you.
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Patrick Dick | 15 Feb 2012 13:55
I totally agree with anonymous. Thortons should go bacg to being Special treats from Special shops served by Special Staff
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Anonymous | 17 Feb 2012 11:41
When all the chocolates in a box taste bland & the same,you are wasting your money,There are several companies producing quality chocolates,that offer what Thornton's no longer considers important.
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David Wood, Iris Associates | 17 Feb 2012 12:02
Thorntons posting a loss during the Christmas period was always going to signal a necessity for change. Hart’s desire to turn things around should inject a fresh outlook on what already stands as an iconic British brand steeped in heritage and authenticity. But in order to weather the storm, I’d like to see Thorntons delve deeper into this heritage and ensure that it’s not lost in the renewed emphasis. Creative invention must be at the centre of its marketing strategy, baked in to the brand's goals, messaging, and culture so that it can be ploughed back into the nation’s hearts.
David Wood, founder of Iris Associates
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