The company blamed the economy, the decline in consumer sentiment and rising raw material costs for a 79% profit nosedive to $1.4 million (£0.9m) for the 53 weeks ended 30 June 2012.
In the firm’s full-year results announced today, the company posted near stagnant sales at $349 million (£217m), but net debt had increased $7.4m (£4.6m) to $46.8 (£29.1m).
Commercial channels
Thorntons chief executive Jonathan Hart said: “We want to meet our customers' current and future needs, trading from a reduced but sustainable and profitable Own Stores estate whilst growing sales across our other channels, specifically our Commercial channel, which will become our largest channel over the next two years.”
While own-store sales slumped, sales to third-party retailers (the company’s commercial channel) grew 7.9% during the year.
Thorntons chairman John von Spreckelsen said: “Despite the challenging economic environment our business with third party retailers, particularly the major grocers, continued to grow both in terms of sales and market share where our leadership of the inlaid boxed chocolate market was maintained.”
“As we rebalance we anticipate that this growth will continue, offsetting the reduction in sales due to the decline in our Own Store numbers.”
New chairman and appointment
Von Spreckelsen will stand aside as company chairman on 1 February 2013 and will be replaced by Paul Wilkinson, current senior independent director.
Keith Edelman, group development director at Bupa and non-executive director at Thorntons, will take on Wilkinson’s former role.
International expansion
Thorntons focus on commercial channels could open up opportunities in international markets as exports sales grew 8.3% in 2012 on the previous year to $6.3 million (£3.9m).
“Our tax- and duty-free sales continued to grow strongly and we saw good growth in a number of territories including South Africa and Australia. Sales to the Republic of Ireland weakened reflecting the poor local economic conditions,” said Hart.
Online and own-stores
The company’s online business ThorntonsDirect is also showing signs of progression with a 4.2% sales boost during the year to $16 million (£10m). An updated website is due to launch this month.
As part of a three-year strategy to focus on commercial channels, Thorntons is paring down its own-stores.
The company previously said that will close 120 of its 344 stores at a cost of around $7.2m (£4.5m). Thirty-six stores were closed during the financial year.
Outlook
Giving his outlook for the year ahead, Hart said: “We do not foresee the economic landscape improving in the near future.”
“We have made our plans accordingly and believe that the actions we have taken and continue to take will deliver improvements to profitability.
“We therefore approach the coming year with cautious optimism."
Thorntons also announced that it had begun to outsource warehousing and distribution to a new partner, DHL, during the financial year, which had improved service levels.