Thorntons is hit by a fresh drop in profit

CHOCOLATE retailer Thorntons yesterday posted a 2.4 per cent fall in half-year profit as it prepared to name a replacement for outgoing chief executive Mike Davies.

Chairman John von Spreckelsen said talks with a prospective new chief were well advanced but he reamained tight-lipped about who the candidate is.

Acting chief executive Mark Robson will return to his old role as finance director of the chocolate maker.

The firm, which issued a profit warning in May, said it made a pre-tax profit of £6.1m in the year to 26 June.

On average, analysts had expected around £6.5m. The group, which trades from around 600 stores, said overall revenue was flat at £214.6m.

Thorntons said its key challenge continues to be the own stores channel, which saw a 3.6 per cent fall in sales.

The company said in a statement: “We have strengthened our senior retail management team and we believe that this, together with extensive product innovation and changes to the promotional and marketing programmes, should have a positive impact on trading in the lead up to Christmas.”

The firm said trading since the year-end had been in line with internal expectations.

Thorntons, which cut net debt to £26m during the year, maintained its total dividend payout at 6.05p.

MIKE DAVIES

THORNTONS
CHIEF EXECUTIVE

BRAZILIAN-BORN Mike Davies took the role of chief executive at Thorntons in October 2006. He had previously been president of Mars in Latin America and is a veteran of the confectionary industry. He also worked at consumer giant Procter & Gamble.

He has faced a challenging time at Thorntons as the recession has taken its toll. Davies said earlier in the year he would stand down in the same week that 35 staff at the company’s head office were made redundant.

Davies inherited a profit slump at the firm and tried to turn around its fortunes with a more extensive product range. His clarion call has been “innovation” with new lines inspired by products from Milan and Paris. Davies said that he wanted to “turn the company’s strategy on its head”.

For the first two years under Davies and chairman John von Spreckelsen, Thorntons went from strength to strength, sweetening investors with rising profits, increasing sales throughout the UK's largest retailers and steady growth from its own namesake outlets. However, the onset of the worldwide downturn produced an increasingly tough environment.