UK confectioner Thorntons has sounded a cautious note ahead of the Christmas period as it booked a drop in first-quarter sales.
In the 14 weeks to 6 October, sales fell 1% to GBP46m (US$73.6m), mainly due to the effect of the closure of 36 stores in the previous financial year. However, like-for-like sales fell 1.7% to GBP21.7m.
Sales from its franchises were down almost one-quarter to GBP2m from GBP2.6m last year, impacted by the collapse of Clinton Cards, one of its main franchisee partners, in May.
Commercial sales, however, grew by 9.8% to GBP21.2m.
Jonathan Hart, Thorntons' chief executive, said consumer spending and the wider economy remained "weak and difficult to predict".
"We are therefore cautious in our outlook for the peak trading season ahead and have set our plans accordingly."
He added: "We continue to focus on improving profitability and are pleased that the margin improvements seen earlier in 2012 are continuing to flow through," he said.
Thorntons' share price climbed 3.3% to 31.50 pence at 11:32 BST.
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FIRST QUARTER TRADING UPDATE & INTERIM MANAGEMENT STATEMENT
Thorntons PLC today reports its first quarter trading update for the fourteen weeks up to and including 6 October 2012.
Key points: • Trading for the period was in line with management expectations. • Total sales declined by 1.0% to £46.0 million, primarily due to the effect of the planned 36 Own Store closures in the previous financial year. • Commercial sales grew by 9.8% to £21.2 million. The order book for Christmas trading remains strong and in line with previous expectations. • Overall sales in Own Stores declined by 7.0% to £21.7 million largely reflecting the store closures. Ten further stores were closed during the period. Own Store like for like sales declined by 1.7%. • Franchise sales declined to £2.0 million as expected following the loss of sales resulting from the administration of our major franchisee partner in May 2012. • Thorntons Direct sales decreased by £0.1m to £1.1 million ahead of the launch of our new website.
Jonathan Hart, Thorntons' Chief Executive, commented: "Consumer spending and the wider economy remain weak and difficult to predict. We are therefore cautious in our outlook for the peak trading season ahead and have set our plans accordingly. "We continue to have confidence in our strategy to rebalance our business, revitalise our brand and restore profitability and are making good progress in its implemention. In our retail business our plans are stronger than last year, with innovative new products and dynamic promotions, and in the Commercial channel we remain encouraged by our strong order book. "We continue to focus on improving profitability and are pleased that the margin improvements seen earlier in 2012 are continuing to flow through."
Original source: Thorntons
