French moves send Thorntons into dive

SHARES in Thorntons, the chocolates and confectionery group, dived 45p to 125p after the company announced a restructuring of its French retail business that will cost almost pounds 8m this year, writes John Murray.

The shares later recovered some ground to close at 144p, 26p lower on the day, as brokers chopped back forecasts of profits of about pounds 10m to losses of about pounds 1.5m for the year to 26 June.

The board said it intended to maintain its total dividend at 3.65p.

Thorntons said it planned to dispose of about 25 of its Martial retail outlets in France, leaving 15 to 20 of the more profitable sites trading.

The rationalisation will lead to an exceptional charge of pounds 7.75m and a goodwill write-off of pounds 2.5m, but the firm said the moves would considerably enhance profitability next year.

The group is also sending John Coyle, a main board director, to Paris to run the French shops. It lost pounds 750,000 in France in the year to July 1992, and expects to make operating losses of about pounds 1.8m to 26 June, including losses on currency exchange. Thorntons has more than pounds 7m in French franc long-term loans.

John Thornton, chairman and chief executive, said that the group's continuing losses in France were unacceptable. 'It became apparent that we would have to act after sterling's devaluation, coupled with high French interest rates and trading conditions,' he said.

'We had a strategy that we believe would have worked in the end, but we are not a large enough company to sustain large losses over a long period.'