Thorntons share price up, reports strong Christmas sales

Chocolate maker Thorntons Plc reported a 7.8% increase in like-for-like sales during December boosted by strong demand for boxed chocolates, seasonal specialties and advent calendars.

Thorntons retail division reported a 2.4% decrease in sales to £44.9 million. However, like-for-like sales in the unit increased 5% during the second quarter, boosted by the robust holiday performance, the company said in a trading update.

“The Retail division experienced strong like-for-like sales growth in the quarter with an outstanding Christmas season which highlights our shoppers appreciation of our brand, product offering and in-store experience,” said Chief Executive Jonathan Hart.

The company said it had closed four stores during the quarter and relocated two other ones as Thorntons prepares for the first half of the year, when the company makes nearly all of its profits. Thorntons operated 247 stores at the end of the quarter.

The chocolate maker said its direct sales to consumer increased 13%, but franchise sales fell 6.4% during the 14-week period.

“Alongside very positive results from our retail division for the second year running, we were disappointed that the continued growth we anticipated in the UK commercial channel of our fast-moving commercial goods division had not been delivered,” said Mr. Hart.

International sales climbed 19% but could not offset a 10.5% decrease in its UK commercial sales and resulted in fmcg sales decline of 10.30% to £41.9 million for the 14 weeks ended January 10. The companys market share also declined during the Christmas period from 8.4% to 7.3%.

The announcement came as long-awaited good news for investors and renewed confidence in the company. Thorntons value has shrunk to almost half during the past year, including the 25% decline on December 23, when the company said it would not meet its full-year targets.

The company blamed supply disruption at its new warehouse in Derbyshire and weak pre-Christmas sales for the profit warning. At that time investors became worried about Thorntons decision to become a branded wholesaler.

“We continue with our transformation towards an FMCG business and the investment in our people, systems and factory is ongoing,” said Mr. Hart.

Thorntons Plc lost 3.95% on Friday and closed at GBX 79.00 in London. On Monday the stock edged up 6.13% to GBX 83.84 at 15:36 GMT, marking a one-year decrease of 41.98%. The company is valued at £54.23 million.

According to the Financial Times, the 3 analysts offering 12-month price targets for Thorntons have a median target of GBX 168.00, with a high estimate of GBX 200.00 and a low estimate of GBX 165.00. The median estimate represents a 112.66% increase from the last close price.