Sour taste for chocolate firm's axed staff

Like-for-like sales at its 377 stores fell six per cent in the 10 weeks to June 26 – down from the 4.6 per cent drop seen in the previous quarter – as the hot weather hit trading.

The summer period is traditionally Thorntons' weakest but a stock overhang has also forced the firm to cut prices more sharply than expected, delivering a further blow to sales.

A review of the business carried out since the end of June will see 35 staff axed from its head office in Alfreton, Derbyshire, over the next three months, the company added.

Thorntons said its excess stock levels had now been cleared, but same-store sales over the year to June 26 were down 3.5 per cent as the firm also struggled with tough trading conditions.

The firm issued a profits warning in May, when it announced that chief executive Mike Davies would retire in favour of a successor with "specific retail expertise".

Thorntons also decided to pull out of low-margin private label work at the end of last year, causing a 5.7 per cent decline in total commercial sales over the year as a whole.

There were some brighter spots in the business, which has traded in line with expectations since the warning. Its Thorntons Direct website was boosted by recovering sales of corporate customers in the second half of the year, pushing up sales 17 per cent.

Franchise sales were also up 20 per cent on last year, when the business was disrupted by the administration of the Birthdays greeting card chain. The number of franchised stores now stands at 222, compared with 197 a year ago.

Numis analyst Andrew Wade said the update revealed "another tough quarter" for Thorntons.

"There seems little doubt that supermarkets are taking a growing share of the commodity-end chocolate market. In fact, to the credit of management, we believe that the actions taken by Thorntons over the last two years on product development and store environment have masked the underlying structural decline," he said.