Thorntons profit warning sent shares plummeting
After warning investors that profits would fall this year, chocolate firm Thorntons’ shares plunged 25% to 86p when the London Stock Exchange opened on Tuesday. They later climbed slightly to 91.24p.
The 103-year-old chocolate maker blamed poor supermarket sales and supply disruptions at its new depot in Derbyshire, England, for the lower profits.
It posted £7.5 million in pre-tax profits last year. In October 2014, it had told investors that profits this year should reach £9.5 million.
In an official statement, Thorntons said:
“Against a strong comparative period last year, the Board now anticipates a decline in sales in the UK Commercial channel for the second quarter of the current financial year.”
“The Board now expects earnings for the full year to be below those achieved for the last financial year.”
Thorntons’ Christmas products are selling well.
The Alfreton-based company added that its own shops and convenience stores have posted growing sales.
Since 2011, the company has undergone a complete overhaul, which brought it back from a loss-making to profitable business. It has shut down unprofitable shops and increased sales volumes via supermarkets, the Internet and other retail outlets.
Its current total of 249 shops will be reduced to between 180 and 200. In its efforts to revamp the brand, Thorntons introduced a new Classic range of chocolates, as well as a new line of fudge and toffee called Nostalgia.
The warning follows a disappointing first quarter performance with sales declining by nearly 12%. UK commercial sales were 16.4% down, which more than offset an increase in sales abroad.
On a positive note, the company said its Christmas seasonal products including chocolate Rudolphs, Santas and snowmen had sold well, and it did not expect to end the year with any significant stock going into the new year.