This aggressive downsizing of the business, coupled with an influx of commercial orders from the likes of Asda and Tesco, keen to get shelves heaving with treats over the Christmas period, have pushed up revenues by 2.9% to £133.7m in the last half, with profit after tax up nearly 50% to £4m.
The deal-brokers over at Thorntons must be doing some back-patting today. Sales of own-branded products to UK supermarkets have increased 16.1% to £51.8m, offsetting the decline in own store sales, which have slipped 8.3% to £62.6m over the past six months. Not surprising when you’re closing stores at an average of three a month. Like-for-like sales are down by 1.5%.
Franchise sales, however, are down by more than a quarter to £5m. This through no fault of Thorntons: a major franchisee was recently placed into administration (pssst, it was Clinton Cards), leaving a gaping hole in the balance sheet. But the delayed relaunch of the Thorntons website and a series of operational issues over Christmas – one of the firm’s peak trading periods – have hit sales in the Thorntons Direct division, which have fallen by by 11.9% to £5.9m.
There does seem to be an increased appetite for Thorntons treats abroad, however: international sales are up 57.7% to £4.1m.
Chief executive Jonathan Hart said: ‘We have strong trading plans in place and exciting new products across all channels. We are confident in the actions we are taking but remain cautious given the continuing challenge of the economic climate.
‘While trading since the period end has been in line with our expectations, we look forward to our important spring trading seasons of Mother's Day and Easter which will be key to the outcome of the full year.’
However, it’s pretty risky to put all your (Easter) eggs in one basket. Short of cracking the secret to Willy Wonka’s everlasting gobstopper, Thorntons is going to have to make some serious changes to its model, and brand positioning, if it’s going to continue competing in the highly competitive confectionery sector for years to come.