Thorntons slides 17% on warning

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The Independent Online
SHARES OF the speciality chocolate group Thorntons fell by 17 per cent to 207.5p yesterday after the company warned that profits for the year would be lower than expected.

Roger Paffard, chief executive, surprised the City with the announcement that Thorntons had revised its full-year expectations down to about pounds 10.5m, against analysts' forecasts of about pounds 13.5m. The company blamed poor Mother's Day and Easter egg sales for a 5 per cent slump in like-for-like sales at its stores in the 44 weeks to 1 May.

One analyst said: "It's a substantial surprise. Most forecasts were around pounds 13.5m, so the downgrade is fairly significant."

Mr Paffard brushed off suggestions that the brand was struggling on the high street and said the disappointing sales were due to a conscious corporate decision that has proved to be a mistake.

The decision to cut marketing costs and reduce the number of new products on offer was taken to help simplify the business as it completed a pounds 53m investment in three reorganisation projects, which include a new factory and warehouse distribution centre. "There was so much change going on in the business that we decided it wasn't a time to concentrate on new products. Although we're very disappointed, we see it as a spring season issue and not a structural one," Mr Paffard said.

Now that the company's investment is complete, it will boost marketing of new products, including a millennium range, impulse bars and yoghurt ice-cream, he said.

Analysts said it would take at least eight months for the company to recover as Christmas is the key trading period.