Thortons blames hot weather for sales dip, warns on profits

By Jane Byrne

- Last updated on GMT

Related tags: Weather, Thorntons

UK confectionery manufacturer and retailer, Thorntons, has issued a profit warning citing the hot weather conditions over the Easter trading period as a factor in its poor own stores sales.

The group said "unusually severe weather conditions"​ and competition from supermarkets had negatively impacted sales over the festive season, with own-store sales for the 16 weeks up to and including 30 April 2011 down by 13.9 per cent to £31.4m.

Like for like sales declined 12.6 per cent, added Thorntons.

“The Easter trading period equates to nearly 33 per cent of the Q3 sales in own stores and the weather in the Easter week contributed to a like for like sales decline of 22.8 per cent in comparison to the same week last year,”​ said the confectionery maker.

“We took steps to ensure that our ice cream was available in more stores than last year ahead of the Easter trading period. However, these significant additional sales were insufficient to offset the impact of the weather on those of our core chocolate items,”​ added chief executive Jonathan Hart.

Thorntons, in a previous trading statement, also blamed adverse weather conditions over the Christmas 2010 period for a poor sales performance. It said the snow had prevented delivery trucks reaching its stores, and, as a result, sales plummeted by £3.5m.

Fragile UK consumer

While “not questioning the integrity”​ of Thorntons’ explanation as to why their own-store sales suffered over this festive period, Clive Black, an analyst with UK bases Shore Capital, said that there were more substantive reasons that hot weather for the chocolate company’s poor performance

"As Easter fell later this year, it was always likely to correspond with warmer weather. However, we don’t see the higher temperatures as having that much of an impact on chocolate sales.

Thornton’s sales dip is more a reflection of the fragile nature of the UK consumer and the changing market dynamic within confectionery retail,”​ remarked Black.

Speaking to ConfectioneryNews.com, he said that shoppers have been prioritizing of late what they will spend their dwindling disposable incomes on, with chocolate just one of a number of food and drink products experiencing weaker demand.

“Stripping inflation out of it, chocolate has become much more expensive over the past five years. The leading brands have been reducing the sizes of their chocolate bars but prices have not followed suit,”​ continued Black.

CEO Hart added that Thortons expects continued weakness in high street footfall and spending.

Limited growth potential

Research firm Keynote in a report on the UK confectionery market published last month notes that growth potential there is limited, citing the UK’s large market size, abundant products and brand dominance.

However, the analyst point to growth trends including home sharing packs or different size formats such as Crunchie Rocks, launched in May 2010.

Looking back over the past five years, Keynote said that confectionery sales rose to year-on-year to hit £5,029bn in 2010, with confectionery expenditure accounting for 10.4 per cent of all UK food bought, and chocolate (£3.732bn sales in 2010) the fastest growing sector by far (up 17 per cent over five years).

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1 comment

Having your cake and eating it?

Posted by Tony Mycock,

What a pity that a flawed strategy over the past couple of years is compounding the woes at Thorntons. On balance over the years they seem to have lost their mid market niche and fallen back to the Dairy Box/Terrys etc market.
I fail to understand why their current Management team think that now Thorntons products are widely available in most Supermarkets, that Joe Public (and former loyal customers) would bother to shop in a Thorntons outelt.
They should have stuck to what they did best and resisted the temptation to supply the Multiples, concentrating on a bigger on-line presence to underpin the shops.
Watch them commencing a plan to divest the shops (and no doubt blame the rise of Internet Shopping). Glad I am not a shareholder or a franchisee!!

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