Thorntons enjoys sweeter profits after stingier Christmas

The UK independent chocolatier sees profits soar. But will they melt away in the tricky second half?

Last Updated: 06 Nov 2012

Since it’s now the UK’s largest independent confectioner (now Cadbury has succumbed to Kraft), those of you with a sweet tooth may be pleased to hear that posh chocolate purveyor Thorntons has reported a near-25% rise in profits. Sales were actually down a smidgen in the first half, but the bottom line was boosted by a reduction in the discounts on offer to shoppers during the Christmas period. Good news for Thorntons’ chief exec Mike Davies – although not for chocaholics, whose habit is now a little more expensive…

Thorntons will presumably be pretty happy with these results, which cover the 28 weeks to January 9 and include the all-important Christmas period. Although overall sales were down 0.7% to £127.4m, Thorntons-branded products were apparently flying off the shelves in supermarkets, where sales were up 5.5% year-on-year. And thanks to less-generous discounting at its stores over Christmas (bah hambug), it was able to boost pre-tax profits by 24.6% to £9.1m. Shareholders are likely to be pretty pleased too: earnings per share rose an impressive 184% to 9.4p, from 3.3p in 2008. Sweet.

Admittedly – much though we hate to rain on Thorntons’ parade – it wasn’t too difficult to improve on its lacklustre performance in the previous six months. The UK chocolatier blamed the sunnier weather at the beginning of last summer (what were the chances?) for profits melting away, although its fortunes weren’t helped by the collapse of the Birthdays chain either, since it used to operate 94 of its franchises. The tricky economic climes also saw businesses spend less on chocolatey gifts for clients, pushing sales at Thorntons Direct down by 31%. But this part of the business bounced back last half, with sales up 11.5% to £5.9m.

But will Thorntons be able to deliver more of the same in the second half of its financial year, which even Davies admits is ‘historically loss-making’? Its problem, as always, will be that it remains heavily-dependent on Christmas trade. Davies hopes to address that this year, perhaps by coming up with some new products to keep us chewing on Thorntons chocs all year round. And if this dismal weather continues, we’ll certainly need something to cheer us up.

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