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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Thorntons | LSE:THT | London | Ordinary Share | GB0008901935 | ORD 10P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 142.875 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
RNS Number:7767G Thorntons PLC 7 March 2000 PART I THORNTONS PLC Announcement of Interim Results for the 28 weeks ended 8 January 2000 Thorntons plc, the speciality retailer and manufacturer of high quality chocolate, toffee and other confectionery, today reports its Interim Results for the 28 weeks ended 8 January 2000. Key Points * Sales up 7.5% at #94.3 million, Own Shop sales up 9.3% * Underlying like-for-like sales up 0.6%, Christmas up 3.9% * New and value product introduction doing well, but at a cost to margins * Over 100% growth in e-commerce * Profit before tax fell to #10.1 million from #12.1 million * EPS down 14.5% but dividend held at 1.95 pence * Revised strategic emphasis:- * more new products * more joint shops * slower own shop expansion * e-commerce - expansion and separation * exploring other commercial opportunities Commenting John Thornton, Chairman, said: "The market is changing and is increasingly demanding novelty, value and creativity and we are responding to that challenge. We are also exploring other avenues to maximise and benefit from the increasing strength of the Thorntons brand name and its reputation for quality, taste, specialness and suitability for gifting. Our challenge is to extend further our offer, product range and availability for every-day purchase, whilst ensuring a strong focus on future profitability. The Board is confident that the current issues are being addressed and new products already in the shops appear to support that confidence. This year profit will be adversely affected but we believe the steps being taken, including the change in strategic emphasis, will be to the medium term benefit of shareholder value." Contact: John Thornton, Chairman 0171 466 5000 on 7 March Martin Allen, Finance Director thereafter on 01773 540550 Charles Ryland/Kirsty Robeson Buchanan Communications 0171 466 5000 CHAIRMAN'S AND FINANCE DIRECTOR'S STATEMENT The 28 weeks to 8 January 2000 reflected clear benefits from New Product Development evidenced through sales recovery at the key Christmas season, but at the cost of increased promotion and marketing expenses. This trend has continued into the second half of the year. It is also clear that, outside the key gifting seasons, we are performing less well and need to attract more customers than currently by offering new everyday products, particularly family-share' or value offers, in addition to providing more novelty and excitement in our shops. Our revised view of this retailing pattern, and our second half year reliance on absolute sales levels, caused us to issue our Trading Statement on 25 February 2000, advising the market that we would not expect to meet last year's full year profit level of #10.5 million. As a result we have also revised our future plans and are announcing some refinements to our previous strategy. RESULTS (before Exceptional Items) Overall sales in the 28 weeks rose to #94.3 million, an increase of 7.5% compared with the same period last year. Operating profit from continuing operations fell 6.0% to #12.4 million over the same period, and profit after exceptional items fell by 4.9% to #12.2 million. As a result of the last 2 year's capital investments, interest costs rose, though borrowings have significantly reduced since June, from #50.7 million to #39.5m. Profit before tax fell by 16.9% to #10.1 million. The tax rate, including prior year credits, reduced to 21.5% (1999: 24.1%) as a result of the continued benefit from capital allowances on the infrastructure investments. Profit after tax fell by 14.1% to #7.9m. Sales Performance Own shop sales rose by 9.3% in the 28 weeks. Underlying like-for-like declines of +3.6% in the first 3 months, as expected, recovered over the Christmas period to +0.6% overall for the half year. Without a significant new product stream, day-to-day performance since December has continued to be driven by promotional offers. Sales recovered however at Valentine's Day, as a result of new product introductions, with underlying like-for-likes of +3.9% and also in recent weeks with the introduction of Toffi-Chocs, the first of a number of new day-to-day product initiatives. Underlying like- for-like sales in the second half, excluding the Valentine's season, are now +2.9%. The total number of shops trading at the end of January was 408, a net increase of 18 since June 1999. We now have 20 Cafi Thorntons including 7 new ones. Whilst the number of Franchise locations has now increased to 120 from 115 over the last 6 months, net sales fell by 22.3% compared to last year, in part mirroring the retail issues above, but also the lower overall number since last year when there were 138. Including mail order and e-commerce, Commercial sales rose by 6.0% to #11.7m. A combination of improved production efficiency but higher promotional needs and change in mix has led to overall gross profit margins being slightly ahead of the same 28 weeks last year at 55.6% (1999: 55.2%). Exceptional Items In the period to January we disposed of 3 empty properties, previously provided for as onerous leases under FRS12 accounting convention. Their disposal has enabled the release of #0.8 million of provisions shown separately under exceptional items in the accounts. The Belper site, now largely vacated, except for toffee, fudge and hard-boiled production, has also been disposed of, post 8 January 2000, for approximately #1.7 million. The loss against book value is #1.1 million and has been provided for in full. Thorntons will continue to lease part of this facility until mid 2003 at the latest, by which time remaining production will have transferred to Thornton Park. Balance Sheet and Cash Flow Net assets at 8 January 2000 totalled #54.3 million, a rise of 8.3% over 9 January 1999 (restated). Operating cash inflows were again very strong at #19.7 million before working capital movements. As a result of capital expenditure falling from #26.7 million in the same six months last year, to only #5.6 million this year, there was a Net Cash Inflow, before financing, of #11.4 million, against an outflow of #7.9 million last year. This has significantly improved net debt from #50.7 million in June 1999 to #39.5 million in January. Gearing has improved from 105.4% to 72.7% since June and compares with 77.8% at January 1999. Dividend As a result of the reduced Profit Before Tax, your Board has declared an Interim dividend of 1.95 pence per share, unchanged from last year. This Interim dividend will be paid on 28 April 2000 to shareholders on the register at the close of business on 17 March 2000. CHANGE IN STRATEGIC EMPHASIS In order to focus on the restoration of strong profitable growth in the shortest possible time, we are making the following changes in strategic emphasis: E-Commerce Over the 28 weeks, compared to the same period last year, we have seen growth of over 100% from the combined Mail Order, Internet and, more recently launched, Open TV sales channels, with total revenue of over #1 million in the period. This has reinforced our view to accelerate the development of these opportunities, which include non- confectionery sales. Currently, whilst we grow the e-business, it adversely effects the profitability of the core business, nor can we put the resources necessary behind it. For this reason we have appointed external advisors to recommend the best way to develop and fund this operation, to maximise its success and the generation of shareholder value. The intention is to physically and functionally separate this operation from the mainstream business into a separate corporate entity. This will allow it to be developed more aggressively, in keeping with the new market dynamics and to operate under a reinforced, dedicated, management team. Day-to-Day Sales The emphasis behind the existing New Product Development initiatives to generate day-to-day sales will be increased together with an additional strong focus on the family-share market. This is an important and growing part of the confectionery market in which currently we are very under represented. Small Catchments Franchise has traditionally been a very profitable segment of our business. However the number of franchise stores have declined significantly over recent years. We have been experimenting in small catchments with joint shops in conjunction with the Birthdays Group (greetings cards). These shops, due primarily to the lower rents normally available in these catchments and the attractiveness of the joint offer, have proved successful and profitable. We have therefore agreed with the Birthdays Group to pursue a rapid roll-out of these units. Own Shops In the light of our focus on the performance of existing shops, our forward opening plan will be slower than previously indicated. We will be concentrating openings on the most profitable opportunities, resites will be minimised and refits concentrated on units where a space advantage can be achieved. Funds will be directed at in-store improvements in existing stores to enhance the customer shopping experience, including Cafi Thorntons. Commercial Sales via third parties remain a very important and profitable part of our business. We are currently exploring opportunities to grow this business more rapidly. Capital Expenditure Future capital expenditure will be focused clearly on profit enhancement, whilst also aiming to significantly reduce gearing levels, interest and the rate of growth of depreciation. BOARD Roger Paffard, Chief Executive, left the Company by mutual agreement on 29 February 2000. We would like to thank him for his contribution to the Company and wish him well for the future. A search for his successor is already underway. In the interim John Thornton, Chairman, will assume direct management responsibility. We are delighted to welcome Helen Wilcox who joined the main board as Marketing Director on 10 January 2000. Helen joins us from Asda where she held various senior positions, including Head of Advertising and Stores Marketing; General Manager, Hypermarkets; Sales Director, George Clothing and latterly General Manager, Communications. She started her career with J. Sainsbury and moved to Wm Morrisons in 1989 where she was Company Brands and Marketing Manager. Michael Thornton, Deputy Chairman and Company Secretary, will be retiring as an Executive Director on 18 March 2000, after 42 years service. We are delighted he has agreed to continue to contribute to the Company, as a non-executive director. We would particularly like to thank all our employees for their hard work and dedication, especially during such a difficult period. OUTLOOK Whilst the gradual recovery of sales growth, especially at key seasons, and the success of new products are both welcome, the profit performance is disappointing. The market is changing and is increasingly demanding novelty, value and creativity and we are responding to that challenge. We are also exploring other avenues to maximise and benefit from the increasing strength of the Thorntons brand name and its reputation for quality, taste, specialness and suitability for gifting. Our challenge is to extend further our offer, product range and availability for every-day purchase, whilst ensuring a strong focus on future profitability. Your Board is confident that the current issues are being addressed and new products already in the shops appear to support that confidence. This year profit will be adversely affected but we believe the steps being taken, including the change in strategic emphasis, will be to the medium term benefit of shareholder value. John Thornton Martin Allen Chairman Finance Director MORE TO FOLLOW IR ZGGGFGVKGGZZ
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