Financial

Thorntons reports pre-tax loss of £35m as high-street chocolatier feels coronavirus impact

By Anthony Myers contact

- Last updated on GMT

Thorntons says consumer love for its chocolates remains strong. Pic: Ferrero UK
Thorntons says consumer love for its chocolates remains strong. Pic: Ferrero UK

Related tags: Thorntons, coronavirus

British high street brand Thorntons chocolates has reported further losses as sales dropped 9.5% to £122.3m in the year to 31 August 2019 compared to £135.1m the previous year.

Retail restructuring and fixed costs meant Thorntons, established in 1911, posted a pre-tax loss of £35m for the year compared with £35.9m last year.

Like many other high-street brands, Thorntons has been operating in challenging conditions due to changing consumer habits and the impact of COVID-19.

"Thortons need to take a step back and ask themselves why they have had such a loss - is it because of consumer trends and customers aren’t buying the chocolate anymore compared to what the economy was like 10 years ago? Or is it a case that consumers are just deciding to purchase the same products elsewhere or different products altogether?," ​Nigel Frith, a senior market analyst at www.asktraders.com​, told ConfectioneryNews.

It’s quite a clear indicator that Thortons are going through a rough time, but with Ferrero having a positive outlook on the chain's future, Thortons will have to adapt to the way the pandemic has also affected other retail chains across the country."

Levi Boorer, UK customer development director at Ferrero said despite the current trading environment,  “consumer love remains strong​.”

In a statement issued by Ferrero UK, Thorntons parent company, Boorer said:  “The Ferrero Group has made significant investments in the UK over recent years, including the acquisition of Thorntons in 2015. Since acquiring Thorntons, we have also invested £40 million to develop the much-loved UK brand in manufacturing, retail, e-commerce and our integration systems, and we continue to do so.

Our strategy continues to focus on being in the locations that meet our customer needs, connecting with our customers through trialling new approaches, which is an important and vital part of bringing our brand to life. We have successfully launched seven newly converted stores in locations including Derby, Uxbridge, Nottingham, Dalton Park, Liverpool, Birmingham and most recently a new premium café store format located in Belfast.

“These new formats, in the right locations, have shown strong results in growth and customer appraisal, such as our Belfast store which has seen a 244% uplift in sales since relaunching. Additionally, we have also remastered our Thorntons Classic range, and this has resulted in a 16% uplift in sales in the last year.

We are proud of the long-term investment we are making in the business and we are confident that the steps we are taking will help secure the future of the iconic Thorntons brand​.”

Accounts for Ferrero UK revealed its revenue declined from £419.8m to £392.2m while its pre-tax profits fell from £9.6m to £7.7m.

"The chain will probably continue to see some more decline unless they can have a strategic plan in place - it’s not about the creative way that Thortons present themselves as they are good at doing so, but they do need to keep in mind that it is now a new generation​," said Frith.

"How are they going to invite this new generation back into their stores and more importantly how can they make them become loyal customers of the brand. Like any chain struggling at the moment, they need to be looking at more long-term opportunities rather than quick wins, because ultimately that is what’s going to save the business​”.

Ferrero International bought Thorntons in 2015 for £110m – and has lost a more than £100m since the takeover by the Italian confectionery giant.

 

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