Thorntons pre-tax profits plummeted as poor trading and strong competition hit performance.
Profit before tax fell from £8.4m to £3.1m for the 28 weeks to January 7. But, after stripping out £2.4m of exceptional items, profits fell to £618,000 largely due to “onerous leases”.
The retailer said current trading was “in line with expectations”.
The chocolatier revealed it is to “explore opportunities” to close a further 60 company-owned stores on top of the 120 closures revealed last June.
Thorntons has so far closed 20 stores at a cost of £700,000 and ended the period with 344 company-owned stores. It now has 230 franchises and growth was slower than expected with 12 new partnerships opening.
The retailer is working towards a company-owned estate of between 180 and 200 stores “in sustainable retail locations” and will look to franchise out some of the closed locations.
Own store sales fell by 7.9% to £68.3m during the period, while like-for-like sales fell 5.5% . Franchise sales fell 13.4% to £6.7m.
It expects its commercial arm selling to the multiples to be the dominant sales avenue in future, with own stores providing a “shop window” for the products.
Thorntons said it was “pleased” sales in its commercial arm grew 6.9% to £48.3m “despite this being less than we had anticipated”.
Online outlet Thorntons Direct grew “solidly” over the period with sales increasing 4.6% to £6.7m. The retailer will launch a new website after Easter.
Its prototype new store concept in Birmingham – which features improved merchandising, store layout and displays – “traded strongly” over Christmas and “will be used to inform a refurbishment programme that will progress during 2012 and beyond”.
Thorntons chief executive Jonathan Hart said: “We are pursuing our chosen strategy and have made good progress in implementing it while weathering a difficult market. These results and the economic climate only reaffirm the need for change.
“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.”
The company said it has a “strong order book” ahead of the key Mother’s Day and Easter trading period.
Keith Edelmen, who holds a number of high profile executive positions including senior independent director at Supergroup, will take up the role of non-executive director on February 21.
New finance director Mike Killick joins the retailer this week, replacing Mark Robson. Thorntons is still looking for another non-executive director.