Chocolate retailer is set to half the number of stores in its portfolio over the next three to five years as the new management team led by CEO Jonathan Hart looks to rebalance the organisation, it was announced today.
The chocolatier currently has around 389 shops and cafés but it is aiming to create “a profitable and sustainable Own Store channel of around 180 stores”.
It was also revealed that there are plans to provide a differentiated and less seasonal proposition in its stores, actions that were deemed necessary following a significant slump in trading at its own stores over the last year.
Results for the company’s third quarter showed a 13.9 per cent like-for-like annual trading decline in own stores and a total sales fall of 0.7 per cent to £64.2 million.
Profit before tax for its full-year is expected to be almost half of that reported in the 2009/10 fiscal period at between £3 million and £4.5 million.
As a brand Thorntons is well respected and enjoys a successful level of sales through its Franchise channel, and it is in this area where business expansion opportunities exist.
Today’s statement from the retailer indicates that the company plans to focus on driving strong growth from its 200-strong Franchise channel, as well as putting more emphasis on its Commercial and Thorntons Direct online operations.
Jonathan Hart, Thorntons’ CEO, commented: “Thorntons is a strong, trusted and highly valuable brand with excellent potential.
“Our goal is to refocus the business across all channels and seek to deliver industry competitive returns over the next three to five years.”
Economic indicators suggest that conditions for all retailers will be tough for the next two years at least, making any restructuring of a business even more difficult to get right.
Getting the renowned Thorntons brand into more retail outlets and reducing the number of stores the company owns is arguably the best way to improve margins, but providing a less seasonal offering perhaps represents the greatest challenge for the business which relies so heavily on good Easter and Christmas sales.
“Although we see the prospect of weakness in high street footfall and consumer sentiment continuing, I am confident that this strategy is right,” Hart explained.
“We continue to adapt in order to meet the changing needs of our customers, while at the same time retaining our current presence on the high street through our Own Stores and our Franchise business.”