“Sales to the grocers and other third-party retailers declined by 12.4% to £54.7M (2014: £62.4M),” the company stated.
“Despite an increase in sales in many of our grocery, convenience and high street accounts we experienced an unexpected reduction in previously indicated orders from two of our major grocery accounts where, in particular, prior year selling space to high-volume lines was not repeated. This resulted in a decline in our overall share of the Christmas market.”
Drop in demand
However, the firm said it was able to respond quickly to the sudden drop in demand, thus minimising the impact on stocks.
By contrast, the company reported international sales up 19.9%, from £4.5M to £5.4M, driven by the US. Total fast moving consumer goods (FMCG) sales fell by 11.2%, from £70.6M to £62.7M.
Online sales also rose by 11.4%, from £4.1M in the same period in 2014 to £4.5M, contributing to overall growth in retail sales.
Thorntons continued to invest in its manufacturing over the half year, successfully installing an additional decorated hollow chocolate production line, boosting capacity to meet future demand.
New moulded line
Its planned investment in a new moulded line for inlaid chocolates also remained on track, ready for installation in late spring or early summer, it said.
The company forecast only a modest rise in raw material costs this year, versus the tail end of 2014, when cocoa prices shot up before falling back.
Franchise sales decreased by 12% as supplies were hit by problems in the commissioning of its new central warehouse and own-store sales declined by £3.8M compared to the same period last year.
Overall, Thorntons reported revenues down from £139.7M to £128.2M in the 28 weeks to January 10. Pre-tax profit also fell from £7.2M to £6.5M.
“Our retail division delivered further like-for-like sales growth as a result of actions we have taken to improve its performance,” said Thorntons ceo Jonathan Hart. “Our FMCG division, however, suffered from difficult trading conditions in its UK commercial sales channel. We responded quickly by controlling costs and production.
“We continue to make planned investments in people, systems, and manufacturing capability, needed to succeed in the FMCG market. We have taken the first steps in a programme to improve the effectiveness and efficiency of the core business, restructuring our executive team and business functions in order to create an organisation that will win in FMCG.
“The difficult trading conditions in our UK commercial channel have persisted into the second half. Ahead of our key spring seasons, we continue to be cautious in our expectations for the full year. We maintain strict control of costs and production and remain confident of our strategy.”