French Connection and Thorntons down on trading reports

 

Shares in fashion chain French Connection have fallen 7.6% and chocolatier Thorntons 7% after both reported Christmas sales figures.

French Connection blamed its weak results on a decision to postpone the start of its winter sale by a week.

Thorntons reported a healthy rebound in overall sales, but the long-term decline at its own stores continued.

Meanwhile Dixons fell on fears the electrical retailer may cut its profit outlook on Thursday.

Its shares had been down as much as 5% in early trading, before recovering its losses to close down just 0.3%.

The Curry's and PC World owner is due to unveil sales data from the Christmas period, when rival Comet collapsed.

Comet, which has now ceased to exist, slashed prices in order to clear its remaining stock in the run-up to Christmas, after it went into administration. This may have diverted trade from Dixons.

Dixons' share price fell 2.8% on Tuesday, when rumours of poor Christmas trading results first emerged.

'Continued demise'

At French Connection, like-for-like sales in the 24 weeks to 12 January - which exclude the effect of newly opened stores - were reported to have fallen by 2.9% from a year earlier, of which 1.9 percentage points were due to the late start of its sale, the firm claimed.

The fashion retailer said it expected to report a loss before tax and exceptional items of £7.5m-£8m for its financial year, which finishes at the end of this month.

Thorntons meanwhile reported a 5.4% overall increase in sales in the 14 weeks to 12 January versus a year earlier.

The figures confirmed a significant reversal of fortune for the company since 2011, when declining sales prompted it to announce a series of store closures as part of a strategy to re-orient sales towards the wholesale market.

The drop in Thorntons' share price following the release of its trading results follows a more than quadrupling of its share price since the beginning of last year on rising hopes of a turnaround.

In line with its strategy, all of the reported growth in the last three months came from the sale of its products by supermarkets and other retailers.

Meanwhile, performance at stores carrying the Thorntons name continued to be poor, with sales at its own-name stores down 9%.

In large part this was due to the closure of 27 of its stores over the last 12 months. Excluding this effect, sales fell 1.3%, down from the 1.7% decline recorded in the previous quarter.

Sales at franchised stores were down 27%, mainly because its major franchisee went into administration last year.

"Overall, these results confirm Thorntons' continued demise as a leading UK retailer with a national store footprint," said George Scott, retail analyst at Conlumino.

"The brand has become increasingly less relevant with the UK retail audience; its new vision to focus on selling to the mass market through grocery multiples has undermined its exclusive credentials and ability to extract a premium on its product."

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