Thorntons predicts tough times over festive season
Chocolate chain Thorntons set the tone for a subdued Christmas on the high street yesterday as it warned over consumer spending and revealed a fresh fall in sales.
The group said it was cautious ahead of the festive season as same-store sales fell 1.7% 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 today, 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 grew by 9.8% 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 and focus on a core estate of 180 to 200 sites.
It currently has 320 own-stores and 182 franchise outlets, after shutting a further 11 in the past three months.
Thorntons said the store closures were largely behind a 1% fall in total sales to £46m in the quarter to October 6.
Franchise sales plunged by 23.8%, as expected following the administration of its major franchise partner Clintons in May.
Shares rose 2% 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.