Thorntons goes cost cutting

By Hayley Brown

- Last updated on GMT

Related tags: Generally accepted accounting principles, Business, Thorntons

Thorntons is exploring ways of clawing back some of its operational costs, after the confectioner saw its pre-tax profit fall 39% to £7.3M for the...

Thorntons is exploring ways of clawing back some of its operational costs, after the confectioner saw its pre-tax profit fall 39% to £7.3M for the 28 weeks ended January 10, 2009.

The firm is introducing a second flexible packaging line to its factory in Derby in a bid to reduce its labour costs by about 30%. The line will be financed by a £1M capex investment, and will be implemented sometime in April and May, according to a spokeswoman for the company.

She said Thorntons was also looking to increase buying ingredients, such as nuts, through e-auctions. Reverse auctions, as they are otherwise known, are procurement tools in which the roles of the buyer and seller are reversed, as suppliers compete to obtain business. Last year, Thorntons made a six-figure saving when e-sourcing specialist Wax Digital (WD) masterminded several managed reverse auctions for the business, as reported​ in Food Manufacture​.

In its latest interim management statement, released last week, the company revealed that its profits had dropped dramatically, largely due to the poor trading in its own stores during the period before Christmas. However, commercial sales grew by 8.9% to £32.4M despite the loss of the Woolworths business.

The “difficulties faced by Woolworths were anticipated and our receivables were well managed, resulting in a small bad debt of £150,000 when Woolworths went into administration”, said chief executive Mike Davies in Thorntons’ interim statement.

The company said it hoped to take advantage of several opportunities to help it improve performance in the second half of the financial year. “These 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,” added Davies.

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