Thorntons plc Transformation Remains “On Track”, Despite Sales Drop

Shares in Thorntons (LSE: THT) fell 19% to 116p during early trade this morning after the chocolate maker unveiled a 7.6% drop in sales in the 15 weeks to 26 April.

ThorntonsThis was due to slower sales in the commercial division — which sells direct to supermarkets — and the cumulative effect of store closures. Own store sales declined 8.8% reflecting the closure of 38 stores, which is in line with a strategy of refocusing away from weak conditions on the high street.

The key Easter season saw sales of seasonal specialties grow by more than 20%, offset by poor performance at Valentine’s Day and Mother’s Day.

Prior to today’s results, Thorntons announced plans to double capital spending over the next three years to boost chocolate production. Thorntons is seeking to reposition its brand identity to deliver year-round sales.

The chief executive, Jonathan Hart, commented:

“Despite this third quarter result we are satisfied with the overall performance of the business for the year to date and we look forward to our UK Commercial channel returning to growth in our short final quarter. The Board remains confident that Thorntons will perform in line with market expectations for the full year and we continue to be confident that our transformation is on track and our strategy is appropriate and working.”

Analysts have pencilled in a dividend of 1p per share in 2014 which, should forecasts prove correct, will double by 2015. At today’s share price you can secure a prospective yield of 1.7%.

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Mark does not own shares in Thorntons.