Ferrero confident Thorntons can deliver growth despite sharp drop in sales and widening losses
According to Ferrero, everything is rosy at Thorntons, following its multi-million pound acquisition of the UK chocolatier in 2015, but new accounts for the year to August 26, 2017 reveal a drop in turnover and widening losses relating to the brand.
At a recent event to launch its Christmas collection across its brands (Ferrero, Kinder, Nutella and Thorntons), a spokesperson for the family-owned global company said Thorntons had experienced a 21% sales increase year-over-year in the chocolate figures category.
With a brand value of £145.4m ($184m) and rafts of NPDs, the company spokesperson said Thorntons is back in growth “after a very tough and long period of time.”
A Thorntons' spokesperson said: 'The latest results reflect the consolidation of the Thorntons relationship with major retail customers with that of Ferrero UK Ltd, together with a continuing and significant financial investment in the reshaping of different areas of the business. Thorntons is a valuable part of the UK business, and the results reflect our strong commitment to continued growth.'
In the year to August 2017, Ferrero UK boosted its revenue by 31% to £383.6m ($487.9m) from £292.3m ($371.8m). It said growth was predominantly due to the full-year sales of Thorntons products.
However, recent accounts for Thorntons have confirmed the company's pre-tax losses almost doubled from £19.1m ($24.3m) in 2016 to £37.5m ($47.7m) while turnover decreased from £191.3m ($243.3m) to £139.7m ($176m).
The losses were partly driven by £19.3m ($24.5m) of one-off exceptional items as the company continued its “rebalance, revitalise and restore” strategy to shift towards branded sales and downsize its own retail operations.
The Grocer reported that Thorntons took a £16.7m ($21.2m) charge in the year relating to lease charges on stores that are no longer trading or for which future trading is projected to be insufficient to cover these costs.
Costs related to UK shop closures were £1.6m ($2.04m), while there was a further £1.3m ($1.65m) of business integration and restructuring costs.
With store closures in the UK, overall employee numbers fell from 3,130 to 2,962, while staff costs fell from £55.7m ($70.8m) to £53.8m ($68.4m).
A statement signed off by the board said: "The company will continue to accelerate management's 'rebalance, revitalise and restore' strategy of recent years, which will continue to evolve as the transition and integration into the Ferrero Group progresses towards establishing Thorntons as an emerging FMCG brand with a strong UK multi-channel retail presence."
- This article was updated on August 16, 2018 to include quote from Thorntons.