Yesterday the chocolate maker Thorntons announced that profits had fallen from £8.4m to £618,000 – a drop of 92%, leading to the proposed closure of at least another 120 shops.
Thorntons saw its shop sales drop by 5.5% on a like-for-like basis in the 28 weeks up to January 7 as rising commodity prices costs impacted on its margins, while revenues achieved through its franchises were down 13.4% to £6.7m.
The firm sold a record amount of chocolate over the Christmas period, but chief executive Jonathan Hart said that people focused on cheaper boxes of chocolates, and tended to buy those that were on offer as Christmas presents.
Mr Hart joined the company in January 2011, after spending five years as managing director at Caffè Nero. Commenting on the slump in profits, he remained decidedly upbeat and said that the figures only reinforced the need for a continuing with a new business strategy.
“We have a well-managed balance sheet, quality asset-backing and good cash generation. The board is confident that Thorntons has the expertise and the resources to successfully complete this transformation and restore profitability,” he told the Retail Gazette.
Hart added: “The economic and retail environment will remain challenging and uncertain for the foreseeable future, certainly through 2012, but we are encouraged by our strong range for the remaining key spring trading seasons of Mothers Day and Easter and have a strong order book to support this.”
Part of the company’s business strategy is to move away from retail sale to wholesale, while building up their internet presence. As well as a new website due to be launched this spring, Thortons is to launch new product lines. Hart hopes that this could help save the company from a complete meltdown.