Thorntons’ fears of faltering festive time

The group said it was cautious ahead of the festive season as same-store sales fell 1.7 per cent in the first quarter of its financial year, dashing hopes of a sustained rebound following a return to growth in the quarter to June 30 during its best performance in three years.

In a less optimistic update, the group said the outlook for consumer spending was far from certain.

Jonathan Hart, chief executive of Thorntons, said: “Consumer spending and the wider economy remain weak and difficult to predict.

“We are therefore cautious in our outlook for the peak trading season ahead and have set our plans accordingly.”

While own store sales were back in the red, Thorntons’ commercial sales – through channels such as supermarkets – grew by 9.8 per cent to £21.2m, adding that the order book for Christmas remained strong.

Christmas trading is crucial for Thorntons and weak festive sales last year contributed to a sharp fall in underlying pre-tax profits to £851,000 in the year to June 30 from £4.3m.

The group is leading a drive to reduce reliance on Christmas and Easter as part of a turnaround that is seeing it close 36 stores to exit under-performing high street locations and focus on a core estate of 180 to 200 sites.

It currently has 320 own-stores, including 24 in Yorkshire, and 182 franchise outlets, after shutting a further 11 in the past three months.

Thorntons said the store closures were largely behind a 1 per cent fall in total sales to £46m in the quarter to Octo- ber 6.

Franchise sales plunged by 23.8 per cent, as expected following the administration of its major franchise partner Clintons in May. Shares rose 2 per cent as Thorntons said its turnaround remained on track despite the sales disappointment, with profit margins continuing to improve.

Retail analyst Nick Bubb said the first quarter sales disappointment was likely to be the result of the poor early summer, which took its toll across the UK high street.

Bethany Hocking at Investec Securities said: “Given the tough backdrop, management has sensibly adopted a cautious stance in peak trading plans.

“We are very positive on the strategy and recent product innovation has been encouraging in our view.

“On a margin standpoint, increases seen in the second half of 2012 have continued to come through which is also positive.

“With Christmas still ahead of us however for now we make no change to our forecasts.

“We thus remain holders, albeit should Christmas go well we see upside from here.”

Travelling confectioner Joseph William Thornton opened his first shop in Sheffield in October 1911.

He handed the keys to his teenage sons Norman and Stanley and said: “Make this the best sweet shop in town.”

Under the brothers’ guidance, the business expanded and in 1948 the Thorntons bought a factory in Belper, Derby- shire.

Thorntons went public in 1987 and last year celebrated its 100th birthday.

It’s sweet on the internet

THORNTONS has been struggling with lower demand as consumers have been reluctant to loosen their purse strings in the face of rising prices, subdued wage growth and high unemployment.

To cope with the slowdown, the company has been closing its high street stores and focussing more on its online business. Thorntons said online sales increased 9.8 per cent in the first half of the year.

The company cancelled its final dividend last month and said revenue and margins during the year were hit as consumers shifted to lower priced items.

Thorntons also said chairman John Spreckelsen will retire next February and will be replaced by senior independent director Paul Wilkinson.