Thorntons hits a new low after third profits alert
Thursday 22 December 2011
Thorntons' shares melted by more than a third to an all-time low yesterday after it warned on profits for the third time this year and said it only expects to "break even".
The 100-year-old retailer blamed "continued weakness in consumer sentiment and high level of promotional activity" for its latest profit downgrade.
Thorntons, which plans to close up to 180 shops over the next three years, issued warnings in February and May and is struggling against intense competition from the upmarket chocolatier Hotel Chocolat and the big supermarkets. Some industry experts believe Thorntons' chocolates have not kept up with the changing taste buds of Britons.
Shares in the retailer, which makes its chocolates in Derby, crashed by 14.25p, or 37 per cent, to 23.25p, the lowest since it floated in 1988.
Thorntons, with 353 company-owned shops and 226 franchise stores, believes its results will be "around break even" for the 53 weeks to June 30, 2012, compared with earlier City forecasts of pre-tax profits between £3m and £4m.
This shows the mountain its chief executive Jonathan Hart, ex-managing director of Caffè Nero, has to climb. Caroline Gulliver, at Espirito Santo, said: "While management has in place a strategy to reduce the store portfolio over the next three years (replacing them with franchised stores), concerns remain as to whether this can happen quickly enough to offset the underlying attrition to high street sales."
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