Chocolatier Thorntons axed its half-year dividend as a rising proportion of lower-margin wholesale business, and shoppers trading down to promotional lines, took their toll - underlying pre-tax profit fell 63 per cent year-on-year to £3.1m. Add in the exceptional costs relating to onerous lease provisions resulting from poor trading and the business barely broke even.
Nevertheless, chief executive Jonathan Hart believes that further development of the commercial channel is the right way to go. He expects it to account for the majority of sales in three years' time, taking over from own store sales which, despite falling 7.9 per cent to £68.3m in the period, still account for over half of group revenues. Although commercial sales are growing steadily, up 6.9 per cent to £48.3m in the period, the shifting sales mix will largely be driven by the ongoing store closure programme, with 20 outlets shut in the half year in line with plans to reduce the size of the estate by as many as 180 shops.
Mr Hart believes that, despite the ongoing shift to commercial, the future benefits of raw material price reductions and manufacturing efficiency gains mean that recent falls in profit margins should reverse as the year progresses.
THORNTONS (THT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 17p | MARKET VALUE: | £11.6m | |
| TOUCH: | 16-17p | 12-MONTH HIGH: | 101p | LOW: 10p |
| DIVIDEND YIELD: | 1.5% | PE RATIO: | na | |
| NET ASSET VALUE: | 25p | NET DEBT: | 103% | |
| Half-year to 7 Jan | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 133 | 8.30 | 8.9 | 1.95 |
| 2012 | 130 | 0.62 | 0.9 | nil |
| % change | -3 | -93 | -90 | -100 |
