The company recorded both sales and profit growth for fiscal 2013 in results released today and says the UK boxed chocolate market is buoyant.
Boxed chocolates growing in the UK
Thorntons CEO Jonathan Hart said: “Consumers are increasingly engaged with chocolate in response to the austere economic climate.
“The likelihood of purchasing chocolate as a treat, to share, or as a gift is increasing. More than ever, consumers increasingly view chocolates as an affordable and acceptable alternative to higher priced gift categories.”
Thorntons said that over 50% of UK adults have purchased boxed chocolate or chocolate assortments in the past year, creating a budding domestic chocolate gifting market worth £516m ($815m).
“Thorntons has the opportunity to grow market share and ultimately grow the chocolate gifting market though our focus on year-round gifting, in particular the market for birthday gifts which accounts for one-third of the overall gifting market,” said Hart.
The company recorded a 1.3% sales improvement to £221.1m ($347.7m) in fiscal 2013 as it concluded its second year of a three year program to shift its emphasis from own-store sales to commercial sales in third party retailers.
The chocolatier’s before tax profit rose from £5.6m ($8.8m) to £0.9m ($1.4m).
Consumer goods division to be the biggest
Thorntons’ commercial channel grew its share in the UK boxed chocolate market in fiscal 2013 from 11.7% to 11.9%, driven by seasonal items.
The company’s fast moving consumer goods division increased its sales by 19% to £101.1m ($159.6m), and the division is quickly catching up with Thorntons’ declining retail business.
The firm has secured the rights to moulded chocolate snowmen and snow dogs, which should help it better compete over Christmas.
International growth and retail cull
The bulk of the company’s sales come in the UK but Thorntons has rapidly grown its international presence.
The company is exporting to former British colonies where its brand has resonance among expats, such as South Africa and Australia.
Thorntons’ retail division registered a 8% sales decline to £102.5m ($161.2m) in 2013. The company is trying to reduce its own store count to around 180-200 shops.
It closed 35 stores throughout the fiscal year and now has 296 stores. The rebalancing act will continue in fiscal 2014 and will mean Thorntons’ commercial division will become its biggest.
Online decline and private label renaissance
The company’s online business Thorntons Direct saw a 10% sales decline to £9m ($14m) as the company was late to develop its new website.
Private label sales grew six fold to £6.3 million ($9.9m). Thorntons stopped private label manufacturing in late 2010, but chose to start up again after being approached by retailers.
Production volumes grew at the firm’s only factory in Alfreton, Derbyshire as Thorntons added new jobs to keep pace with demand.