Q3 growth at Thorntons hit by slow sales
The company said strong performance at Easter, with sales of seasonal specialities increasing by more than 20%, had failed to offset these factors, plus the inclusion of early spring sales in Q2 figures. Valentine’s Day and Mother’s Day sales had fallen below expectations, it added.
On the positive side, like-for-like retail sales for the company grew by 1.2% in the 15 weeks to April 26. And total sales, as well as sales in its fast moving consumer goods (FMCG) division were up in the year to date.
However, comparing Q2 with Q3, FMCG and retail sales dropped, dragging total sales down by 7.6%, from 92.8M to £57.7M.
George Scott, senior consultant at analyst Conlumino said the results fell “below expectations, with Thorntons seemingly undergoing a bumpy journey as it continues to reposition from a retailer to largely a supplier of chocolate …”
However, he stressed: “To be fair to Thorntons, much of its Q3 sales decline came from its on-going store consolidation programme. Ten stores were consciously closed during the period, reducing the estate to 271 outlets, which evidently reduced sales capacity, explaining at least some of the 8.8% fall in company-owned store sales.”
In addition, he highlighted that franchise sales were up 5.7%, compared to own-store sales, which fell 8.8% during the period. That supported the firm’s increased focus on manufacturing, he claimed.
‘Challenging trading environment’
Commenting on the results, Thorntons ceo Jonathan Hart said: “Set against the continuing backdrop of a competitive and challenging trading environment the key Easter season saw all our channels delivering sales growth. Customers responded positively to our Easter innovations and we anticipate further good growth in our Easter market share.
“Despite this third quarter result we are satisfied with the overall performance of the business for the year to date and we look forward to our UK commercial channel returning to growth in our short final quarter.
“The board remains confident that Thorntons will perform in line with market expectations for the full year and we continue to be confident that our transformation is on track and our strategy is appropriate and working.”