British chocolate maker Thorntons plc said it was pleased with its 5% increase in like-for-like retail sales over Christimas (14 weeks to Jan 10), but disappointed with its UK commercial sales within its FMCG (fast-moving consumer goods) division, which fell by 10.5% over the same period.
The lower FMCG sales were due to difficulties experienced in some major grocers as well as short-term problems at its new centralized warehouse, the company said in its Second Quarter Trading Update.
Like-for-like retail sales did well, mainly due to shopper demand for Thornotns’ inlaid boxes, advent calendars and seasonal specialities including chocolate Rudolphs, Santas and snowmen.
In the three-week period leading to Christmas (Dec 1 to 24) like-for-like sales were 7.8% up compared to the same 3-weeks in 2013.
In December, the company had issued a profit warning, which sent shares tumbling.
Source: “Second Quarter Trading Update,” Thorntons plc.
FMCG Division
Divisional sales fell by 10.3% to £41.9 million.
UK Commercial sales were 10.5% down on the previous year, with overall market share during the Christmas period falling to 7.3% versus 8.4%.
International sales, however, were 19% up on the previous year.
Retail Division
Divisional sales at £44.9 million were 2.4% down on the previous year.
The decline was partly due to the shutting down of four stores and the relocation of another two. By the end of the quarter the company had 247 own stores.
Like-for-like sales rose by 5%, Consumer Direct sales grew by 13%, while franchise sale were down by 6.4%.
Thorntons’ Christmas products sold well.
Thorntons’ Chief Executive, Jonathan Hart, said:
“The Retail division experienced strong like-for-like sales growth in the quarter with an outstanding Christmas season which highlights our shoppers’ appreciation of our brand, product offering and in-store experience. Demand for our boxed chocolates, seasonal specialities and advent calendars was particularly high.”
“Alongside very positive results from our Retail division for the second year running, we were disappointed that the continued growth we anticipated in the UK Commercial channel of our FMCG division had not been delivered. The challenges we experienced within specific grocers accounted for the majority of the share decline.”
“Good growth in many of our grocery, convenience and high street accounts and a strong performance from our Retail division gives us confidence in shopper demand for our brand and products. We continue with our transformation towards an FMCG business and the investment in our people, systems and factory is ongoing. We have good plans for the spring seasons and the Board remains confident in its multi-channel strategy and ongoing transformation.”
Since 2011, Thorntons has undergone a total overhaul, which brought the company back from a loss-making to profitable business. Unprofitable stores were shut down, while sales volumes increased through supermarkets, the Internet and other retail outlets.
