In store sales melt away at Thorntons
Decline triggers 16% fall in share price
By Insolvency News, 12 January 2012. Posted in Corporate
Thorntons has reported own store product sales nosedived by 6.8 per cent in the 14 weeks to 7 January, compared to the same period in 2011.
At £44.9 million, this represented a like for like decline of 4.2 per cent.
However, the embattled confectioner also declared a massive sales decline of 17.5 per cent in its franchise business, which dropped to £4.1 million.
Overall, the total retail division within the group – which includes its own stores, franchises and Thorntons Direct – dropped by 6.4 per cent.
Jonathan Hart, chief executive of Thorntons, said franchise stores faced the same pressures as retail stores, leading to the dismal performance.
He added: “The continued decline in sales from our own stores and franchises was consistent with the wider retail pattern experienced in the high street.
“Our new products were successful and our Christmas ranges sold through well. We ended the period with minimal excess stock.
“However, consumers have remained very cost conscious over the period and have been purchasing selectively. There has also been a high level of promotional activity across the market.
“This has been evident across all our sales channels and has negatively impacted our gross margins and consequently profitability in the first half of the year as we stated in our December trading update.
“We expect continued weakness in consumer sentiment throughout 2012. This reaffirms our strategy to rebalance the business, create a smaller retail estate, revitalise our brand and most importantly restore profitability over the next three years.
“We are confident that we have the strength and resources to deliver it.”
Thornton’s Group share price tanked 15.6 per cent on today’s announcement, settling around 11 pence.
By Joe McGrath