Thorntons issues Christmas profits warning

By Michael Stones contact

- Last updated on GMT

Thorntons blamed the profit warnings on lower sales to supermarkets
Thorntons blamed the profit warnings on lower sales to supermarkets

Related tags: London stock exchange, Stock market, Supermarket, Thorntons

Thorntons has issued a Christmas profits warning, telling investors profits will be lower than expected due to a slump in supermarket orders.

Falling sales in its UK commercial channel would result in full-year earnings below those achieved for the past financial year, it warned in a statement t​oday (December 23). Last year, the business delivered £7.5M in pre-tax profits.

The statement continued: “We have recently experienced a significant reduction in previously indicated orders from the major grocers who also took in stock later than anticipated. While there has been an overall decline, 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.”

While its UK commercial channel in its fast-moving consumer goods division was experiencing tough trading, the retail division was currently experiencing like-for-like sales growth, with good growth in both its convenience and high street sectors.

Christmas speciality products

Christmas speciality products have sold well and no significant excess seasonal stock was expected.

Thorntons identified two main challenges in the first half of its financial year. The first was a significant reduction in previously indicated orders from the major grocers who also took in stock later than anticipated.

Second, the business experienced significant difficulties with its new centralised warehouse, in Derbyshire, which resulted in disrupted deliveries for customers. “In particular in our UK Commercial channel we experienced lost and late sales with consequent missed promotional slots and reorders,”​ said the firm.

The warehousing and distribution facility was now working normally, it added.  “The move to a centralised warehouse was essential to meet current and future business patterns and growth. This will result in improvedcapacity and quality of service for our customers in the future.”

Business analyst Begbies Traynor said Thorntons seemed to be falling behind the market.Partner and retail expert Julie Palmer said: “While most families will be reaching for the Quality Street and Celebrations this Christmas, it seems Thorntons is still failing to keep pace with the competition, surprising the market with a profit warning at the worst possible time of year for the struggling chocolatier.

‘Hit Thorntons hard’

“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.”

Meanwhile, in early trading on the London stock market Thorntons shares plummeted 25% to 86p.

In October the manufacturer warned its sales were being hit by supermarkets' changing order patterns​.

Three years ago the business decided to close unprofitable stores and boost sales through  supermarkets and other outlets in a bid to revive flagging profitability. Thorntons operates 249 shops and plans to reduce that number to between 180 and 200.

The firm will post its next trading update on Monday January 19 2015.

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1 comment

Not special

Posted by Paul Nugent,

Thorntons chocolates was once deemed to be very special. Now their products are everywhere - it's nothing special anymore.
Once their goods appeared in a supermarket, stacked next to bounty/topics/twix, etc...it's perceived value was lost.
It's called 'greed'.

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