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Thorntons' growth melts in the sun

20-May-2003

While most people in the UK will have been pleased that the Easter holidays this year were blessed with warm sunny weather, this is not the case for everyone.

Sunny weather is good news for many companies in the food and drink industry, but for confectionery groups such as Thorntons , it is widely seen as bad news - and all the more so when the sunshine coincides with one of the most important selling periods of the year.

In a trading statement issued today, Thorntons said that trading over the Easter period had not lived up to its expectations because of the exceptionally hot weather in the week leading up to Easter Sunday. While the group managed to sell off its stocks of Easter eggs, many of them were offloaded at discount prices after the Easter period.

The disappointing Easter period was all the more frustrating as Thorntons' trading up to that period had been well ahead of the previous year, with like-for-like own shop sales running at more than 3.6 per cent higher.

"Our performance continued to demonstrate that the increased emphasis on product and packaging innovation, plus stronger in-store management, was bearing fruit. In the final week before Easter, however, like-for-like sales fell by 7.4 per cent. Easter, overall, currently represents around 10 per cent of annual sales," the company said.

The company said that it had anticipated compensating for much of this lost income through cost savings and higher sales after Easter, but that it had been forced to revise this assessment in the light of the current weak retail market.

"Profit before tax for the financial year ending June 2003 will not be materially different from last year which was £7.1 million," the statement continued.

"This situation, while clearly disappointing given the progress we have been making in recent years, does however provide even more evidence to show that the strategic direction in which we are heading is absolutely correct. This is to widen the availability of Thorntons branded product, through broader distribution while at the same time strengthening our retail proposition. In the longer term, this will reduce the seasonal and weather-sensitive nature of the current business," the company added.

This wider distribution includes selling a number of Thorntons branded products through the multiple retailers, and the company said it had recently secured new listings with Safeway and Morrisons as well as additional listings at Tesco. Agreements with other retailers are expected soon.

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