Division provides a sweet taste for Thorntons

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STRONG demand for Thorntons chocolates in supermarkets has helped the company to offset the decline in its own high street stores.

The group said total sales rose 2.1 per cent to £47m in the 14 weeks to October 5, despite a 5.7 per cent decline to £23.2m in its own shops.

Thornton’s commercial operation, which includes sales to other retailers such as supermarkets, reported an 11 per cent increase in sales to £23.8m in the period and it now represents the biggest part of the business.

Chief executive Jonathan Hart said he was pleased with the performance of the two operating divisions.

He said that Thorntons, which has over 40 stores in Yorkshire, has an “exciting Christmas offer” and a strong order book in place for its commercial division.

“This puts us in a good position ahead of the key Christmas trading period,” he added.

The decline in retail sales came as it closed eight stores in the period, which left the group with a portfolio of 288 stores at the end of the quarter.

Like-for-like sales fell 0.4 per cent on the previous year.

The City is forecasting profits of £7.2m for the year to June, compared with the £5.6m reported last month and the previous year’s figure of £850,000.

Analyst Nicola Mallard, at Investec, said: “The first quarter is one of the group’s quieter quarters (typically around 20 per cent of annual revenue) as there are no major celebratory periods.

“The like-for-like retail performance for own stores was down 0.4 per cent, but this was due to a few difficult weeks trading and, for the majority of the period, like for likes were positive.

“FMCG (fast moving consumer goods) sales increased by 11.0 per cent, more than offsetting the decline from the retail operation.”

Analyst Simon French, at Panmure Gordon, said: “Thorntons has reported an encouraging interim management statement continuing the momentum established in the business over 2013.

“We leave our consensus in-line forecasts broadly unchanged to leave the stock trading on a PE of 9.9 times, which is inexpensive for the around 47 per cent three-year compound annual growth rate in earnings per share we forecast.”