Thorntons maintains profit growth

By Charlotte Eyre

- Last updated on GMT

Related tags Sales Marketing Percentage point Thorntons

UK chocolatier Thorntons yesterday posted an increase in net sales
for the fifth quarter running, as the company's business recovery
plan continues to prove effective.

Mike Davies, the chief executive, joined from Mars two years ago, pledging to revive the fortunes of the company, which struggled with a £3.1m drop in operating profit in 2006. The company's earlier investments in new cafes and franchises, as well as the launch of a single origin line and an organic truffle selection, clearly left the company in much better shape. For the 28 weeks ending 12 January 2007, revenues increased 13.9 per cent to £126.7m. Operating profit also went up to hit £13.1m, a 13 per cent increase compared to the same period last year. "Thorntons continues to make good progress across all channels and has now delivered sales growth for five consecutive quarters,"​ Davies said. "We remain focused on strenthening our brand proposition, product innovation, in-store developments and customer service." ​Unlike many other confectionery firms, Davies said that rising commodity costs had only a "limited"​ effect on the company during the period. Although margins fell by 3.6 percentage points, the decline was due to a shift in what channels the products were sold through, and an increase in marketing spend, he added. "The impact of raw material cost increases were largely offsetby improved manufacturing overhead absorption,"​ the company said. In term of area growth, commercial sales - products sold in supermarkets and retail outlets other than Thorntons - experienced the strongest increases of 45 per cent to £29.7m during the quarter, the company said. Product sales in own stores and franchises went up by 4.7 per cent to £82.1m, and 18.6 per cent to £9.6m respectively.

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