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Thorntons Forecasts Profit Drop

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Thorntons Forecasts Profit Drop

Thorntons forecast a drop in full-year profit as the UK grocery industry’s difficulties spread to affect the purveyor of fine chocolates at Christmas. Its shares fell as much as 35 per cent.

 

A “significant reduction” in indicated orders from the main supermarkets weighed on business at the Alfreton, England-based company, whose customers include Tesco and J Sainsbury. Grocers also began stocking items later than anticipated, Thorntons said today.

The news adds to concern about festive sales at the UK’s main supermarkets, which are losing customers as more shoppers switch to Aldi and Lidl. The German discounters spent twice as much on UK advertising as market leader Tesco in the initial build-up to Christmas, researcher Nielsen said last week.

“While there has been an overall decline, the performance in the grocers has been mixed with good growth in several of our major partners, yet significant volume decline in some others where prior year sales of high-volume lines have not been repeated,” Thorntons said in the statement.

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Thorntons fell as much as 35 per cent to 77 pence in London trading, the steepest intraday drop since 21 December, 2011. The shares traded at 91 pence at 8:34 a.m., down 23 per cent.

The forecast of a profit decline for the year ending in June compares with analysts’ estimates before today for an increase in pretax profit to about £9.9 million ($15.4 million) from £7.5 million a year earlier.

The century-old confectioner also cited warehousing difficulties for an expected decline in sales at its UK commercial unit for the second quarter of the financial year.

Bloomberg News, edited by ESM

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