Thorntons the chocolate maker has had a bit of a torrid time of late.
Share Price – in mid May 2007 the share price stood at £2.04 which valued the 68 million shares in issue (and therefore the entire business) at just shy of £140 million. On 7th January this year the share price was 10 pence per share and today (21st February 2012) has recovered to 25 pence per share valuing the business today at a little over £17 million. So in May 2007 it would have taken you, me and quite a few mates to find the cash to take over the entire business; now it would just be you and me!
I’m obviously being a bit disingenuous here but you can see the massive change in the value of the business over the four and a half years. Hold on, you say, there is a global recession on and surely it has affected all businesses. True but there appear to be specific reasons why Thorntons has gone through the experience that it has.
Revenue increased between the 2007 accounting year end and 2011 year end from £186m to £218m so that’s a 17% increase (or an average of 4% per annum), not bad in a recession. However, the operating profit margin fell from 4.8% in 2007 to 0.4% in 2011. So Thorntons sell £100 worth of chocolate in 2007 and see £4.80 profit from it for their efforts, but by 2011 selling £100 of chocolate only yields 40 pence of profit. Oops!
So much for the financials!
What could have caused this decline in fortunes?
Commercial issues – using a business analysis such as SWOT (assessment of Strengths, Weaknesses, Opportunities and Threats) would suggest the following have contributed to the financial position of Thorntons:
· The seasonal nature of sales – with a heavy reliance on sales at Christmas and Easter time
· Declining strength of the brand name in the minds of consumers
· Product is sold through other retailers such as Tesco as well as through Thorntons owned and franchised stores – so profit is shared with these other retailers
The recession has caused a flight by customers away from mid price mid quality offerings to either cheap or expensive chocolate - so Thorntons have ended up somewhere in the middle
· To achieve sales growth, promotional pricing has been required
· A higher proportion of sales have been from lower priced, lower margin products
· There has been reduced high street footfall due to the economic downturn and the growth of consumer purchases over the internet
As many high street stores close (Woolworth’s, Zavvi, etc.) the attractiveness of a visit to the high street declines even further and the store layout is starting to look a little jaded and uninteresting.
It also suffers from a lack of globalisation - all revenue arises from UK operations and so there is no diversification across geographical markets and the business is a single product business – chocolate is chocolate – yes they sell many different chocolate products but it is still just chocolate (apologies to the chocolatiers amongst you)
What changes for the future to resurrect those financials?
After a strategic review several changes are being made at Thorntons including the following:
· The closure of 120 stores (presumably underperforming or loss making stores) over the next 3 years as leases expire
· Development of a differentiated and less seasonal product offering
· Cutting the cost base by outsourcing warehousing and distribution
· Improving store merchandising
· Development of a new Thorntons Direct website.
I do not own Shares in Thorntons, none of my friends or relatives work for them so I can speak with an independent voice.
My recommendation is that next time you walk past a Thorntons shop, turn around go in and treat yourself (after all you are so worth it) or treat a friend, loved one, customer or client to some of the wonderful chocolate that Thorntons manufactures and sells. This is a British company that it would be great to support.
And if they read this and want to send me a complementary box of chocs, who am I to object?
Simon Dawkins ACA
Financial and Commercial Awareness Training Specialist
Flying Fish or Audience...which came first?
Andy Reid must take pride of place this month as he achieved something he has been working towards over the last two years. As those of you who know Andy will be aware, he spends a lot of his 'spare' time in helping his community and working with his church. He decided two years ago that if he could, he would make it a full time occupation and this month Andy passed his 3 day assessment centre and was accepted to train as a vicar for the Church of England!!!
Well done Andy!
It has been a busy month as we are now on the final leg of development of the Action Planning software that will run alongside our Your360 product. This amazing piece of online software will enable you to create a clear process that will monitor the way people follow up their action plans after a course - measuring anything you want:
- Money saved
- Contracts won
- Negotiations undertaken
- Pitches won
- Staff recruited, or turnover reduced
Waste saved, meetings organised, clients satisfied - in fact anything you consider is a key objective for your programmes can be build into the online system. Whatever your course you can then ask the system to identify how a particular region is doing, an office, a service line, delegates ona course.
Everything displyed ina simple report!
Call Thelma on 01892 610060 and ask for details.
On line 360
Our online 360 tool has now been launched and you can view the site on www.your360.eu
It provides any company with an opportunity to create their own bespoke 360 in a cost effective way using any questions and competencies they need. The first clients to use it have found that:
"its very easy to administer and really does what you said on the tin..!"
"...very effective feedback given in a clear and easy to appreciate manner - the action planning aspect forces you to think about actions to take as a result of all the information..."
What has impressed clients is the way that the site can be created to reflect their own website so that it appears to be an internal resource - their own language and their own competencies.
We were thrilled to hear it was so well recieved and look forward to keeping you updated with variations as it progresses.
We are creating a bespoke leadership programme for BAMs leaders that will span a year long programme comprising a balance of training and coaching to enable the teams to face specific challenges in their workplace and project work over a period of time.
We have also launched the online business planning tools - UpaGear that we will be offering to clients over the next few months. This is a year long programme to track execution of businessplans. Our research has shown that all firms create business plans but most never follow through and rarely does anyone go back to them during the year to check progress.
Our programme enables you to create a powerful plan in one day and then monitor the progress of your team (even remotely) through to completion, enabling you to track who is on target and who is not completing their actions.
As Easter approaches we have been working hard on an exciting online 360 project.
Over the past few years we have been using proprietary 360 feedback froms and while some are very good - nothing can replace a 360 that has been tailored for the competencies that you use in your business.
So we decided to examine if we could create an online 360 that will enable a client to have their own set of questions, tailored to their own competenices and even adaptable for different circumstances. And we've done it!
This project has taken Vince and Paul about 3 months to complete but we are now testing the system and will launch Your360 at the end of April. It gives our clients control over their 360 feedback in terms of questions, competency sets that will most appropriate for each level of personnel.
We will also be offering a fully bespoke version hosted on one of our secure servers in the UK that can reflect your brand.
Please call Paul on 01892 610060 to find out more
A happy but chilly new year greeted us all with feet of snow in the South where our head office is based and feet of snow in Scotland which kept Vince and Derek very busy indeed!
In the last two months we have seen a change in the approach being taken to the development of people by many of our clients and other firms. As the economy seems to stabilise there is rising pressure to ensure that teams are kept motivated and strong leadership is seen to be pulling businesses through the worst of the recession.
Clients have been looking to set out their strategy for the next few years and choose a way to manage that strategy rather than the popular - 'lets have an awayday and then file our strategy on the shelf!'
In the last two months Ian Cockerill and Paul Richmond have been working on a Strategic Planning programme that provides businesses leaders with a way to ensure that results get delivered. Far from being a training course, this programme takes a cold, hard look at how KPIs are set and managed and delivers a Strategic Plan that a team leader can ensure is delivered.
As February draws to a close we have also been completing the work on our very own bespoke 360 programme that will allow clients to create their own unique, branded 360 reports to include their own competencies suitable for PDRs and promotions. This will be released in March.
A busy two months with a focus on delivering training programmes before the year end for many firms.
Servite Houses ran Winning Strategies - our variation on Simon's successful Ready 4 Business simulation that engaged the board at Servite. As a result the board were able to discuss the key issues of concern to any Housing Association - tenant satisfaction, voids, arrears, repairs and financing options. All this in a friendly but competitive environment, the two days were a great success.
Ready 4 Business was also delivered to Barton Wilmore, a planning and architechtural consulting firm as part of their leadership programme. This highlighted how their firm could maximise its opportunities to manage working capital and stay profitable in challenging times.
What an exciting month - we have almost all taken part in a large medical confernece that saw Vince, Derek, Angus, Andy and Paul as well as half a dozen other colleagues engage with 300 delegates on a two day urology conference. An exciting conference programme, plus the high energy team from Right Training meant that this achieved all the conference organisers were hoping for - pictures to follow!
Simon and Paul have now completed development on the commercial awareness simulation for Servite Housing and are looking forward to running the programme next month in London.
It is a time for consolidation in the marketplace and many clients are just beginning to think about how to develop their teams next year. We are all excited at the prospect of the new Best Year Yet! Website being launched as this is a great improvement on what has been available previously. BYY! may well be the best leverage that companies can use over the next 2 years to ensure their teams maintain focus and achieve (or better!) their targets.
The summer months and they have seen us all enjoy a break and spend time developing other courses. Paul has been all over the country running a workshop based programme for health service professionals while Simon has been busy taking ready 4 Business out to a number of potential new clients.
We now have a working Ready 4 Business that has been developed exclusively for Housing Associations and we believe can make a real difference to their abilities to aquire and maintain 'Green Status' - reflecting Best Practice.
July became a busy month as we have been pitching for work with Servite Houses - one of the larger Housing Associations in the UK with just over 18,000 homes under management. We met Servite's head of O&D Tamara Grigulis at the Training and Development summit earlier in the year and Vince and Paul went to their London offices as part of the tender process to present a coaching programme to their selection panel. Full of enthusiasm and chocolate - we await the results of the design of a 6 month coaching programme for their 120 managers.
Meanwhile Andy Reid went out to Nuttals - a construction firm with whom he has worked in the past and discussed a management programme that they would like us to run. We also completed a pitch for a management development programme with Clarke Willmott a Bristol based law firm for whom we have run other programmes for in the past.
We are also working on a business survey that we will be looking to write over the next month or two on the impact of the recession on L&D.