Sales savvy shoppers and weak footfall on the high streets contributed to a drop in sales and profits at chocolate retailer Thorntons.
The company reported a £1.2M fall in revenue to £217.1M while pre-tax profit slipped from £4.3M in 2011 to £900,000 in the year to June 30.
Total retail sales including own stores, franchise and Thorntons Direct declined by 5.2% to £132.1M. Its board has not recommended a final dividend.
Chief executive Jonathan Hart said squeezed consumer spending hit the Alfreton-based business.
This was particularly evident during the pivotal Christmas period where shoppers plumped for promotional lines or lower-priced goods.
Lost sales
“This had an adverse effect on both revenues and margins as our sales mix shifted into promoted lines and we lost sales of higher priced items,” Hart said.
The company also bemoaned structural problems with the UK’s high streets, including high vacancy rates and weak footfall.
Despite this, Hart said the company was turning the corner.
One year into its three-year turnaround plan – which includes a drive to reduce reliance on the peak Christmas and Easter periods alongside the closure of 120 stores – its market share increased from 7.7 to 7.8%.
“Despite the challenge to profitability over the past year, in particular during a difficult first half, the actions we have taken have started to deliver benefits during an improved second half,” said Hart.
Despite conceding that the economic landscape was unlikely to improve, Hart remained positive about the future.
Cautious optimism
“We have made our plans accordingly and believe the actions we have taken and continue to take will deliver improvements to profitability,” he said. “We therefore approach the coming year with cautious optimism.”
Meanwhile the company has announced that Paul Wilkinson, its current senior independent director, will succeed John von Spreckelsen as chairman upon his retirement from the board in February.
Wilkinson’s career includes spells at Unilever, Grand Metropolitan and Rank Hovis McDougall. He is also the chairman of the National Skills Academy and the chairman of the Food Manufacturing Excellence Awards (FMEAs) judging panel.
