Bottom Line: Hart’s turnaround plan sweetens shares

 
Elizabeth Fournier

AFTER a tortuous few years, things finally seem to be on the up for Thorntons. Shares may have dipped slightly yesterday but that was pure profit taking – to be expected after a 14 per cent rally earlier in the week after activist investor Crystal Amber upped its stake.
Two years into his three-year turnaround plan, chief executive Jonathan Hart seems to have turned a corner.
His programme of store closures – something Crystal Amber pushed particularly hard for – is on track and the strategy of focusing on selling popular products via supermarket shelves instead has proven itself to be a big success.
With a year still on the clock until his plan is completed, Thorntons is already back in profit at the earnings per share level, and analysts are getting excited.
As Hart continues laying down the foundations for sustained growth, forecasters are focusing on 2016’s full-year results – by which time the firm should be able to hit Crystal Amber’s dream profit margin of between six and eight per cent.
In the meantime, shares have doubled in price since the start of the year – even breaking above £1 for a moment in May.
A firm like Thorntons – heavily reliant on big ticket events like Christmas and Easter – is perfectly placed to benefit from the improving outlook for UK consumer spending. If that materialises as hoped, there’s no reason the shares shouldn’t go even higher.