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Thorntons predicts double-digit growth

July 4, 2014

CHOCOLATE maker Thorntons has estimated a 51 per cent rise in full-year pretax profit and said its UK commercial channel returned to double-digit percentage revenue growth in the fourth quarter.

Thorntons, which sells its products in its own stores as well as to supermarkets, also said its lenders have agreed in principle to provide an increased revolving credit facility of pound(s)75 million which would run through to October 2018.

Investec Securities analyst Nicola Mallard, said: "This increased facility will provide headroom for the increased working capital requirements associated with serving third-party retailers."

Thorntons said pretax profit before exceptional items is predicted to have risen to pound(s)7.1m for the year ended June 28, in line with market expectations and up from pound(s)4.7m a year earlier.

Analyst Peter Smedley of Charles Stanley Securities said the estimate "underpins our confidence that Thorntons continues to successfully navigate the recovery phase of its transformation strategy."

The brokerage has a "buy" rating on the stock with a target price of 200 pence.

The Derbyshire-based company, which has expanded its online business, closed 10 stores in the third quarter, leaving it with 271 of its own stores.

Thorntons reported a 7.6 per cent drop in third-quarter sales in April, hurt by early spring deliveries in the second quarter and lower UK commercial sales.

UK commercial sales declined by eight per cent in the third quarter. The company expects the sales channel, which accounted for about 40 per cent of overall sales in 2013, to be the largest channel by the end of financial year 2014.

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Source: Herald, The (Scotland)

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