Thorntons profits not so sweet
Pre-tax profits at the UK Thorntons chocolate chain has dropped 39 per cent to £7.3 million (€8.2m) in the six months to 10 January as it was forced to cut prices to encourage shoppers to keep spending over Christmas. Despite this, chief executive Mike Davies notes that trading has now picked up, with like-for-like sales up in every week since Christmas except the week of snow.
The company delivered an overall sales increase of 1.3%. Sales increases were reported from three of its four sales channels but own stores sales declined during a period in which High Street trading conditions deteriorated.
Davies adds, “Profit was adversely affected by increased promotional activity in response to rapid market decline during the second quarter. Steps were taken to reduce non-discretionary costs, although their impact in the half year was limited. We should improve performance in the second half of the financial year and benefits include a three week longer selling season due to a late Easter, increased selling opportunities following the closure of Woolworths and improved productivity versus last year when we incurred higher costs due to the early Easter.”
Sales to consumers were driven in particular by the company’s website where sales are up 26% versus last year. Corporate sales to companies that use the products as gifts for their employees or customers have declined as most companies reduce any discretionary spend due to the credit crunch.
