Hard times for Thorntons coincide with ceo’s departure
Four years of ceo Jonathan Hart’s efforts can’t quell profit losses
When Jonathan Hart took on the ceo position at UK-based Thorntons, he saw it as an incredible opportunity to capitalize on the 104-year-old company’s brand recognition and its vast retail market.
In 2010, 60 percent of the company’s £214 million sales came from retail operations. However, as time went on, retail shop sales dropped 9 percent. Several High Street (Main Street in America) shops had seen a decrease in foot traffic, and 179 of store leases were set to expire during the next three-year period.
Hart had a solution.
“Before I came onboard, many at the company thought that our consumers only purchased our products in retail shops; that they wouldn’t buy them elsewhere,” he says. “We realize that our loyal customers will purchase Thorntons products wherever they are available, be it in the retail shops, grocery stores or convenience marts.”
Since commercial sales were growing by 26 percent, Hart took steps to “rebalance, revitalize, and restore” the Thorntons legacy. The plan included enhancing commercial sales, developing an international business, and strengthening the retail shops.
Unfortunately, this came at a price. Hart’s focus on commercial sales meant sacrifices needed to be made, which came in the form of a reduction of the number of shops by at least 120 over the next three years.
By 2014, half of the company’s revenues, £111 million, were coming from commercial sales. The future was looking bright. The focus on Fast-Moving Consumer Goods (FMCG) appeared to be working. Consumer recognition was leading the pack at 58 percent and brand advocacy was at 52 percent.
Then the bumps started to appear in the road. Two of Thorntons’ major grocery customers reduced their initial orders, and a new centralized warehouse by DHL experienced delivery issues. This double punch caused sales dip by 10.3 percent for the 14 weeks leading to January 10.
While Thorntons released a profit warning in December and revealed the 10 percent profit loss in March, problems continued as retail sales went down to £27.7 million for the 15 weeks to April 25, 2015.
Thorntons blamed the lack of growth on “lower than expected performance” across other weeks in the quarter, including the one leading up to Mother’s Day.
This brings us back to Jonathan Hart, who is resigning his position at the end of the current financial year on June 27.
Thorntons chairman Paul Wilkinson says, “Over the past four years, Jonathan has turned around our retail business, as well as creating and delivering the vision and strategy that will serve as the platform for the continued transformation of Thorntons into an international consumer goods business.”