Thorntons pre-tax profit dips after impairment charges

For the year to June 25, pre-tax profit and exceptional items was £4.3m, down from £6.9m. Exceptional items totalled £5.4m, against £0.8m the previous year, consisting of impairment and onerous lease charges.

Sales were up by 1.7% to £218.3m, but like-for-like sales in its own stores business were down 7.9%.

Thorntons chief executive Jonathan Hart said: “In the year that marks the centenary of Thorntons, I am pleased to report record overall sales, despite the challenging retail environment. This highlights the strength of our multi-channel strategy, as well as that of the Thorntons brand, with sales of branded products rising by 2.2%. Commercial sales have grown by an impressive 25.9% over the full year and we are encouraged by our forward orders for Christmas 2011.

“As announced at the time of our strategic review, our goal over the next three years is to rebalance the business and to create a profitable and sustainable retail estate. While we expect to see the weakness in high street footfall and consumer spending to continue through 2012, we are confident that this strategy is right for the company.”

Total retail sales, including own stores, franchise and Thorntons Direct declined 8.2% to £139.5m.

The retailer said the fall in own store sales reflected the weak consumer environment, reduced footfall, and weather impacts at Christmas and Easter.

Thorntons believes it can operate a profitable portfolio of own stores with between 180 and 200 stores, located primarily in the top 150 retail locations. It will take advantage of the 179 lease expires over the next three years to close around 120 stores and explore opportunities for a further 60 weak stores. It will grow its franchise operation in the areas where it shuts own stores.

Thorntons expects the weakness in footfall and consumer sentiment to continue into 2012. However, it expects a strong year in its commercial channel.