Sweet performance from Thorntons
solid first half results helped by improved like-for-like sales.
Thorntons, the UK confectionery producer and retailer, has reported solid first half figures, with turnover ahead 2.3 per cent to £104.7 million and operating profits up 5.8 per cent to £12.7 million.
Pre-tax profits for the 28 weeks to 11 January 2003 were up 10.1 per cent to £10.9 million. Like-for-like sales for the first half showed good growth, rising 1.6 per cent, while in the first five weeks of the second half, like-for-like sales were up 3.6 per cent, helped by a 6.3 per cent rise in the two-week run-up to Valentines Day.
Peter Burdon, chief executive, welcomed the good results. "In the first 28 weeks of the 2002/3 financial year, we have delivered higher sales, better margins and a strong cash flow. Since then we have had good sales growth in the run up to Valentines Day."
Burdon said that the improvement had come from Thorntons' twin strategy of improving profitability of its shop estate and manufacturing capability and working with its partners to build the Thorntons brand name by offering a wider selection of confectionery and other sweet food for sale through a greater number of outlets.
"Our vision of becoming the UK's leading retailer and distributor of sweet special food is continuing to be realised," he said. "We are confident that long-term growth can be generated from this business model."
Own shop sales increased marginally during the half, despite a planned reduction of the estate by five shops to 390, while the number of franchise outlets increased by 10 to 191, and total sales from the franchise arm were up 9.7 per cent. Further franchise locations - around 30-40 in total - are being investigated for potential openings in the next few years.
Selling its own confectionery has been Thorntons' core business for many years, but in recent times it has expanded into other areas, such as the creation of a range of innovative gift and impulse products sold through the Marks & Spencer chain. This is seen as a major area for growth in the future, both with M&S and with other food retailers.
"Our initial focus has been on a small range of bars which were launched in Tesco in March 2002 on a 12-month exclusive arrangement. This initiative helped sales from the commercial division to grow for the first time in four years, by 7.4 per cent to £9.8 million," said Burdon.
"The range of sweet special foods, ranging from cakes and puddings to biscuits and a toffee liqueur, has proved popular with the licensed manufacturers, major retailers and, most importantly, customers. Total royalties paid to us, excluded from the sales figures above, were £251,000 against £56,000 for the same period last year."
In the same vein, Thorntons has grasped the new business opportunities presented by the Internet and has developed a substantial mail order business over the last few years. Sales through this division were ahead 37 per cent to £3.4 million during the half.
Thorntons' growth strategy also includes improving the packaging of its products, such as Eden, a new range of boxed chocolates launched in time for Valentines Day, presented in a striking black and pink box. The company is also redeveloping its coffee shops, which operate under the Cafe Thorntons name, with three new outlets planned for the second half.
