Thorntons Transformation Continues But Consumer Confidence A Worry

Thorntons strategy is continuing to deliver and is maintaining momentum. The transformation has seen overall sales revenue increase by 4.5% to £139.7m with both the FMCG and the retail divisions performing well. FMCG is now the largest division by revenues and will be for full year 2014. Pre-tax profits and exceptional items went up 47.3% to £7.2m. It is the third consecutive half of improved profits and assets.

The brand is still very strong with high spontaneous awareness and outperforms other mass premium brands. Thorntons remains the highest gift purchase consideration in the chocolate category with 67% and maintains its strong market share. Customer satisfaction levels remain high.

Investments in working capital and capital expenditure have helped reduce short-term cash flow and the trend is expected to continue for the next two or three years. The gearing ratio has been reduced by continued increase in net assets. Net assets improved for the third consecutive financial half and net debt growing at a lower ratio helped reduce gearing. The focus is on restoring the financial health of the business but these encouraging results show that the strategy is right and is delivering improvements in financial performance.

Thorntons is based on a 65 acre site at Alfreton in Derbyshire, with state of the art manufacturing facilities covering 30,000sqm producing 35,000 tonnes of chocolate per annum. It has over 2000 employees, 1100 of which are permanent. The staff turnover is very low. They are highly skilled staff with an average of 10 years experience. Thorntons has a 'World Class' manufacturing capability but they realize the importamnce of having a strong customer focus.

Thorntons intend to maintain their strategic direction of 'rebalance, revitalise and restore'. The chocolate market will continue to grow and remains competitive. There are new products to be launched for the key seasonal markets of Easter but a lack of consumer confidence remains a worry so the future will be approached with some caution.