Thorntons has booked higher first-half earnings, which were boosted by lower costs and a rise in sales.
The UK chocolate maker said profit before tax and exceptional items rose to GBP5.3m (US$8m), up from GBP3.1m in the comparable period of last year. Net income jumped by 49.3% to GBP4m as exceptional costs dropped by more than two-thirds to GBP700m.
The company also saw sales rise by 2.9%, boosted by "significant" market share gains in the commercial channel. Own store sales continued to fall as the company made progress on its strategy to shutter underperforming outlets and focus on generating sales through retail customers.
"We are encouraged by the overall progress we made during the first half of the year. This performance demonstrates that our strategy is generating results as we continue to rebalance the business, revitalise the brand and restore profitability," CEO Jonathan Hart commented.
Announcement of Half Year Results
Thorntons today announces its half year results for the 28 weeks ended 12th January 2013.
Financial
· Revenues up 2.9% to £133.7 million (2012: £130.0 million).
· Profit before tax and exceptional items rose by £2.2 million to £5.3 million (2012: £3.1 million).
· Profit after tax rose by 49.3% to £4.0 million (2012: £2.7 million)
· Exceptional items total £0.7 million (2012: £2.4 million) consisting of impairment and onerous lease provision movements.
· Cash generated from operations £15.0 million (2012: £11.6 million).
· Net debt at period end was £17.5 million (2012: £16.2 million).
· There is no interim dividend (2012: Nil).
Operational
· Sales of Thorntons branded product in the UK Commercial channel increased strongly by 16.1% to £51.8 million (2012: £44.6 million).
· Significant market share gains in UK Commercial channel.
· Own Store sales declined by 8.3% to £62.6 million (2012: £68.3 million), mainly due to the closure of a further 13 stores in line with the long-term strategy. Like for like sales decreased by 1.5%.
· Franchise sales declined by 25.4% to £5.0 million (2012: £6.7 million), mainly reflecting the placing into administration of our major franchisee in May 2012.
· Thorntons Direct sales declined by 11.9% to £5.9 million (2012: £6.7 million) due to the late deployment of our new website and operational issues in the peak selling period.
· International sales grew by 57.7% to £4.1 million (2012: £2.6 million).
· Sales of Private Label grew to £3.9 million from £0.8 million.
· As a consequence of the continued rebalancing of sales away from Own Stores into Commercial channels gross margin declined by 1.1% points.
Jonathan Hart, Thorntons' Chief Executive, commented:
"We are encouraged by the overall progress we made during the first half of the year. This performance demonstrates that our strategy is generating results as we continue to rebalance the business, revitalise the brand and restore profitability.
"Our customers have responded positively to our increased focus on innovation, value and service and our market share has grown further. This reflects the continued strength of the Thorntons brand across our multi-channel distribution model.
"Whilst trading since the period end has been in line with our expectations, we look forward to our important spring trading seasons of Mothers' Day and Easter which will be key to the outcome of the full year. We have strong trading plans in place and exciting new products across all channels. We are confident in the actions we are taking but remain cautious given the continuing challenge of the economic climate."
