Thorntons issues profit warning
Wednesday 21 December 2011
Thorntons raised fears of a Christmas flop on the high street today as the chocolatier warned it was trading below hopes and was unlikely to make a profit next year.
The group, which has 579 stores in the UK, said pre-tax profits would be around break-even in the year to June, compared with £4.3 million in the previous year, as intense competition and weak consumer confidence continue to undermine the business.
Thorntons, which plans to shut 180 stores over the next three years as part of a turnaround programme, has suffered as cash-strapped consumers cut back on chocolate treats and previously warned it had lost a large corporate order at its internet division.
There has been a mixed picture in the run-up to Christmas with some major players, such as John Lewis, reporting healthy sales, while official figures for November showed a drop in monthly sales volumes.
Thorntons has struggled so far this financial year, which started in July, with its most recent update showing a near 8% decline in like-for-like sales at its company-owned stores.
The company said high levels of promotional activity in its market place had hit business along with the ongoing drag on consumer confidence.
The City had been expecting pre-tax profits of £3 million to £4 million for the year to June 2012.
The company unveiled a strategic review in June, which as well as the store closures will include improved merchandising, updated layouts and new products.
The group will close a minimum of 120 stores over the three-year strategy period, losing many to expired leases, and will explore opportunities to close up to a further 60 stores.
Thorntons added that it may look to re-site or open stores in the UK's top 100 retail locations if opportunities arise.
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