Thorntons issues profits warning


Published: Tuesday 23rd December 2014 by The News Editor

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Chocolate maker Thorntons has warned that its earnings will fall this year after seeing reduced demand from some supermarkets in the run-up to Christmas.

The retailer, which has 249 stores, has also experienced short-term problems at its centralised warehouse in Derbyshire which opened in the autumn, resulting in lost and late sales.

Shares in Thorntons opened more than 20% lower today after the shock warning to the London stock market.

Thorntons has relied on more sales through its commercial channels such as supermarkets as it comes to the end of a three-year turnaround plan that has seen it close dozens of its own stores.

In October it told the market that it expected to meet full-year pre-tax profits forecasts of £9.65 million for the year to June, up almost a third from £7.5 million in its last financial year.

However it now expects profits for the current period will fail to grow after a “significant reduction” in previously indicated orders from major grocers who also took in stock later than anticipated.

It said: “The performance in the grocers has been mixed with good growth in several of our major partners yet significant volume decline in some others where prior year sales of high-volume lines have not been repeated.”

The business added that its new warehouse was now working normally, while its store estate was also experiencing like-for-like sales growth.

In October it reported a quarterly sales slump due to lower supermarket demand and a quieter period for its own high street stores.

The business said then that revenues through commercial channels such as supermarkets fell 12.8% to £20.8 million in the 14 weeks to October 4, causing group sales to tumble 11.9% to £41.4 million.

Thorntons has said it plans to reduce the size of its store estate to between 180 and 200 outlets over the medium term.

The chocolate maker said the teething problems at its new warehouse in Alfreton, close to its head office in Derbyshire, caused disruption for all its customers despite extensive prior testing at the site.

For its commercial channel customers, the problems led to missed promotional slots and re-orders.

However, the firm said the new depot would result in improved capacity and service to customers in the future.

Independent retail analyst Nick Bubb said: “Embarrassingly, less than six weeks after an upbeat strategy update with analysts, today has brought a Christmas profit warning from Thorntons.”

Investec said it has placed all of its forecasts for the business under review, and would await Thorntons’ next update on January 19 for greater clarity on trading.

Begbies Traynor partner Julie Palmer said: “Despite reporting strong sales of its seasonal Christmas products, lower-than-expected orders from the UK’s largest supermarkets have hit Thorntons hard this festive season, reducing its visibility among its core customer base at what should be one of its busiest trading periods.”

Published: Tuesday 23rd December 2014 by The News Editor

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