Strong retail growth at Thorntons pulled back by commercial sales weakness

Thorntons has reported like-for-like retail sales growth of 7.8% in the run-up to Christmas, but total second quarter revenues fell due to poor UK commercial sales.

Like-for-like retail sales for the 14 weeks to 10 January rose by 5% to £44.9m and by 7.8% from December 1-24^th, driven by demand for Thorntons’ inlaid boxes, seasonal specialities and advent calendars.

However, as Thorntons previously warned just before Christmas, UK commercial sales within its increasingly important FMCG division fell by 10.3% to £41.9m. International commercial sales increase by 19%, but UK commercial sales declined were down by 10.5% over the second quarter. Overall market share of Christmas declined to 7.3% from 8.4%.

Thorntons said this was a consequence of “challenges experienced in a couple of major grocers, combined with short-term difficulties at our new centralised warehouse”.

Total company sales were down by 6.4% to £86.8m in the second quarter, leading to an 8.2% first half revenue fall to £128.2m.

Jonathan Hart, Thorntons’ chief executive, commented: “The retail division experienced strong like-for-like sales growth in the quarter with an outstanding Christmas season which highlights our shoppers’ appreciation of our brand, product offering and in-store experience.

 “Alongside very positive results from our retail division for the second year running, we were disappointed that the continued growth we anticipated in the UK commercial channel of our FMCG division had not been delivered.

“Good growth in many of our grocery, convenience and high street accounts and a strong performance from our retail division gives us confidence in shopper demand for our brand and products. We continue with our transformation towards an FMCG business and the investment in our people, systems and factory is ongoing. We have good plans for the spring seasons and the board remains confident in its multi-channel strategy and ongoing transformation.”

Four stores were closed and two relocated during the period as the chocolatier continues to shift its focus to FMCG and away from retail, leaving a retail store estate of 247 at the end of the quarter. As a result of general downsizing to the retail division, total retail sales fell by 2.4% during the second quarter. First half like-for-like retail sales were up 2.2%.