Chocolatier Thorntons has reported a fall in sales and profits as weak consumer spending hit the business, but chief executive Jonathan Hart expressed “cautious optimism” about the future.

Sales slipped by 0.5% to £217.1m and pre-tax profit fell from £4.3m in 2011 to £900,000 in the year to June 30.

But Hart said action taken to improve first-half margin decline took effect in the second half and showed his turnaround strategy is starting to work.

Thorntons shut 36 company-owned stores closed over the year and is on track to achieve its target of closing 120 by 2014. Ultimately, the retailer aims for an estate of 180 to 200 shops.

Total retail sales, including own stores, franchise and online, fell by 5.2% to £132.1million. Own store like-for-like sales slid by 3.8%.

Franchise sales declined 7.8% to £10.7m as “difficult trading conditions resulted in a dampening of prospective franchisees’ appetite for investment”.

The administration of franchise partner Clinton Cards in May caused 46 franchises to close. In total, 69 franchises shut during the period, bringing the total number of franchised stores to 177 - down from 227 in 2011. Thorntons is in talks with Clintons’ new owner, American Greetings, to reopen the franchises.

Sales growth of 7.9% through other retailers’ stores was fuelled by a strong Easter. The retailer is seeking more partners and recently struck a deal to supply Walmart-owned Massmart in South Africa, as revealed by Retail Week last week.

However, a difficult Christmas hit the business as promotions by big grocers affected margins.

Hart is enacting a strategy to slim down the retailer’s own store estate, make commercial sales to other retailers Thorntons’ biggest sales channel and improve Thorntons’ multichannel credentials. The retailer will launch a new website later this month.

Hart said: “This last year was the first of our three-year plan to restore the company’s fortunes. Despite the challenge to profitability over the past year, in particular during a difficult first half, the actions we have taken have started to deliver benefits during an improved second half.

“The quality of our products, our brand and customer loyalty remain our core strengths and we are pleased that our products continue to be as popular as ever. We do not foresee the economic landscape improving in the near future.

He added: “We have made our plans accordingly and believe that the actions we have taken and continue to take will deliver improvements to profitability. We therefore approach the coming year with cautious optimism.”

The retailer has revamped three of its stores to a new format which includes elements such as an improved gift-wrapping offer. Elements of the model are being rolled out.

The company has also appointed a new chairman, Paul Wilkinson, who is at present senior independent director. He will succeed John von Spreckelsen as chairman following his retirement next February. Non-executive director Keith Edelman will succeed Wilkinson as senior independent director.

The retailer has also appointed Martin George as an independent non-executive director. He joins on November 1.