UK chocolatier Thorntons has suffered a 63% decline in profits in its half yearly report and intends to close almost half of its own stores and focus on commercial retail sales.
The company said that will close 120 of its 344 stores at a cost of around £4.5m. A further 60 stores are also potential candidates for the chop.
Company revenues during the 28 weeks ending on 7 January 2012 were flat at around £130m.
However, profits were down a staggering 63% from £8.4m in the same period last year to just £3.1m this term.
The plummet has been attributed to a decline in own store sales, increased raw material prices and consumers opting for discounted products.
‘Need for change’
Thorntons CEO Jonathan Hart said: “These results and the economic climate only reaffirm the need for change.”
“While our sales emphasis will develop through our commercial channel, our reduced retail estate will remain an important shop window for the brand.”
He added that the economic and retail environment for Thorntons would remain challenging and uncertain for throughout 2012.
Currently, own store sales account for the majority of Thorntons’ sales at £68.3m, a decline of around 8% on last year.
But Thorntons now plans to focus on the Commercial side of its business which experienced growth during the period of 6.8% to £48.3m.
International sales also oversaw growth driven by the Middle East. However, the £400,000 international sales boost was slightly offset by declines in Ireland.
In December last year, Thorntons issued a profit warning and said that it had been hit by weakened consumer demand and strong marketing competition.
The company’s marketing strategy was criticised by former chairman Peter Thornton in May last year. Thornton said the company had opened a surplus of shops and claimed that his views were not sought as he was considered “old” and “out of touch”.