Thorntons sales continue to slip in second year under Ferrero

High street chocolatier Thorntons fell deeper into the red last year amid a continuing decline in sales and store closures during its second year of ownership by Italian confectionery giant Ferrero.

Newly-filed accounts at Companies House showed Thorntons’ sales fell 3.3% to £135.2m in the 53 weeks to 31 August compared to the previous year’s 52-week financial period, as it continued to axe stores as part of its refocus on fmcg business.

Losses before exceptional items surged to £35.5m from £15m amid a “challenging retail environment”, while headline losses rose to £38.3m from £31.1m.

Exceptional charges of £2.4m were lower than the £19.3m taken the previous year, primarily driven by a £16.9m property and lease impairment.

However, one-off charges related to store closures rose to £1.9m in the latest accounts compared with £1.6m in the previous year, while it also took a £395k charge related to business restructuring as it progressed its integration within the Ferrero brand and its efforts to shift emphasis from retail to fmcg.

Thorntons was taken over by the Nutella maker in August 2015, in a deal valuing the formerly listed British company at £112m.

At the time of the takeover, the chocolatier’s estate counted 242 own stores, but it now trades from just 121 own stores across the UK and 117 franchise outlets.

Thorntons stated in the accounts: ‘The company maintains its strategy of “rebalance, revitalise and restore” which continues to evolve as the transition and integration into the Ferrero Group progresses towards establishing Thorntons as an emerging fmcg brand with a strong UK multi-channel retail presence in the long term.’

A Ferrero spokesman added: “Since Ferrero acquired Thorntons in 2015, we have invested £30m to develop the Thorntons business in manufacturing, retail, e-commerce and our integration systems and continue to do so.

“The latest financial results continue to reflect the consolidation of the Thorntons relationship with major retail customers with that of Ferrero UK, a challenging retail environment, together with a continuing and significant financial investment in the reshaping of different areas of the business.”

He added Thorntons was a “valuable part of the UK business”, with Ferrero committed to its “continued growth”.

Despite the store closures resulting in a sharp reduction in employee numbers, staff costs for financial 2018 remained flat at £53.4m due to an increase in pension provisions.

Thorntons’ average number of employees fell to 2,634 from 2,962 at the end of the previous year. In August 2015, less than two months after the takeover, the British brand employed 3,361 people.

On a pre-tax basis, annual losses reduced slightly to £35.9m from £37.5m, as administrative costs fell by 13% to £68.9m. .”