Thorntons store cull puts 750 jobs at risk
Wednesday 29 June 2011
Thorntons will close up to half its stores, over the next three years, putting 750 jobs at risk, in the latest drastic action by one of Britain's embattled retailers.
The chocolate maker will shut at least 120 of its 364 stores at a cost of up to £4.8m and has earmarked another 60 branches for possible closure.
The job losses will affect up to 17 per cent of the workforce as the company marks 100 years in business.
The proposed cuts mean about 10,000 British retail jobs have been put at threat in the past week after Habitat, Jane Norman and Homeform, the kitchens group behind Moben, entered administration.
Jonathan Hart, the company's new chief executive, said the closures would be broadly spread through the country but would be mainly in smaller high streets and shopping centres.
The closures will be further grim news for Britain's provincial town centres, which are feeling the pressure of the economic downturn, out-of-town competition and the threat of the internet.
Mr Hart, who joined Thorntons in January, said he had spent six months examining the business store by store.
He said the company was suffering from customers reining in spending because of economic uncertainty but that Thorntons had not done a good job of selling its goods.
The company's shares fell 7 per cent to 58p – their lowest since March 2009 in the depths of the recession.
Mr Hart said Thorntons relied too much on Christmas and Easter and outside those periods "I would suggest the customer has to work very hard to find a solution to their gifting needs".
He wants to lure more customers for birthdays, anniversaries and "just because moments".
Presentation in stores needs to be clearer and chocolates will be presented outside their boxes to show off their quality, he added.
Analysts at Execution Noble said: "The key here remains Thorntons' ability to recapture sales lost from closed stores at other channels ... Management has a lot to prove."
As part of the shake-up, Mr Hart, who joined from Caffè Nero, will take control of the retail business. Peter Wright, Thorntons' marketing director and a former Tesco high flier, will leave on Friday.
The company is also targeting more than £2m in cost cuts, including the farming out of its warehouse and distribution operations.
The store closures will leave its commercial arm, which sells through supermarkets and other non-Thorntons outlets, as the biggest part of the business.
Mr Hart's radical surgery follows two profit warnings by Thorntons in 2011. In May, the company blamed the warm Easter for a slump in sales. That alert came after the pre-Christmas snow was blamed for poor performance at the company's other big trading period. Mr Hart said yesterday: "It would have been easier to say we had a few problems than the reality of the situation. The high streets of Britain were deserted in that very hot [Easter] week."
He said the company's strong brand had kept overall sales up 3 per cent in the third quarter of the financial year.
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