Thorntons bites back at critics of slow closures pace
Thorntons mounted a robust defence of its strategy yesterday following criticism by an activist investor over the weekend about the slow pace of the chocolatier's store closure programme.
The 317-strong group's assertion that its strategy is the "right one" was boosted by it delivering a sharp spike in half-year profits. This was driven by strong sales of chocolates to the big supermarkets, although its retail revenues slipped.
The activist investor Crystal Amber has built a 3.4 per cent stake in 102-year-old Thorntons, and wants it to shut stores more quickly. Richard Bernstein of Crystal Amber, which disastrously ploughed huge sums into the collapsed retailer JJB Sports, said: "We would like to see more urgency attached to the execution."
Speaking to a Sunday newspaper, he added: "The emphasis on execution extends through the whole enterprise – for example, it was poor that the company's online offering for Christmas fell short of what it had planned."
Thorntons' profits jumped by 71 per cent to £5.3m over the 28 weeks to 12 January, which prompted its chief executive, Jonathan Hart, to say: "There is clear evidence the strategy is working and we believe it is the right one."
On Crystal Amber's criticism, he said: "In terms of our store closures, we will close 120 over the three years' of our plan. We are on track to do that."
The retailer exited 36 shops last year, and plans to shut a further 40 this financial year. Alongside closing unprofitable stores, Thorntons' strategy is centred on ramping up its commercial division's sales to the grocers, such as Tesco, cutting office and supply chain costs, and growing online revenues.
Its commercial division grew revenues by 16.1 per cent to £51.8m over the half year but its underlying store sales fell by 1.5 per cent as consumers continue to cut back on treats.
Reflecting its shop closures, Thorntons' total retail revenues tumbled by 8.3 per cent to £62.6m, and the group forecasts that commercial sales will overtake retail next year.
Mr Hart said he expected its online sales to return to growth in the second half, following an 11.9 per cent fall to £5.9m after it suffered technical problems. He said: "We launched the new website in September and unfortunately we did not have the full functionality that we intended."
Mr Hart said trading had been "in line" with expectations since mid-January, adding that its "heart-shaped" chocolates had sold well over Valentine's Day.
Its shares rose 5.38p, or 12 per cent, to 47.75p yesterday.
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