CHOCOLATE retailer Thorntons yesterday warned of tough trading conditions after it saw half-year profits melt by 9 per cent despite a bumper Christmas.
The company said it had been hit by a cut in orders at two major supermarkets and teething problems at its new centralised warehouse.
The update came as Marks & Spencer announced it is to close five stores in China and shrink its Shanghai head office as part of a strategic shake-up.
Profits before tax and exceptional items at Thorntons fell to £6.5 million for the 28 weeks to 10 January as sales dipped 8.2 per cent to £128.2m. Investors were left without an interim dividend for the fourth year in a row.
Thorntons’ chief executive Jonathan Hart said that the company remained “cautious” in its expectations for the full year, but added: “We are well-positioned to take advantage of an improvement in consumer spending.”
Derbyshire-based Thorntons – which is closing around 20 stores this year as it aims to cut back to between 180 and 200 outlets – saw like-for-like retail sales rise by 2.2 per cent though total store sales fell by 5.2 per cent to £65.5m.
The group said: “Alongside positive results from our retail division, we were disappointed that the continued growth anticipated in the UK in our fast-moving consumer goods division was not delivered. This was the result of an unexpected reduction in orders from two of our major grocery partners.
“In addition, the period saw disruption in supply and service to our customers as a result of now-resolved short-term difficulties at our new centralised warehouse.
“The overall performance of the business in the first half of this financial year was disappointing.”
Thorntons had issued a profit warning in December over weaker supermarket demand and problems at its Alfreton warehouse.
Hart said the group had responded quickly to problems in its commercial sales division by controlling costs and production. He added that first steps had been taken in restructuring the core business, including a shake-up of the executive team.
Shares in Thorntons last night closed down 4p, or 5.5 per cent, at 69p.
Marks & Spencer’s shake-up in China will see 60 jobs cut and the number of sites in the country fall from 15 to ten.
However, the retailer aims to return to 15 stores over time starting with a “firm intent” to enter key cities such as Beijing and Guangzhou from the 2015-16 financial year, which starts next month.
The high street retailer said it had “reviewed the shape of its existing store portfolio to ensure it’s best aligned with its strategic growth plans”.
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