Investors in Thorntons have been on a rollercoaster ride over the past two weeks as shares fell more than 20% in the week leading up to the chocolatier’s first-half results - almost touching a two-year low of 60p. This slide triggered a raft of buying activity, clawing back value to 71p before dropping another 5.5% to 69p following the posting of interim figures. It has since bounced back to 72.2p, but Investec analyst Nicola Mallard argued there were few stocks cheaper than Thorntons in the consumer space.
Half-year sales collapsed in Thorntons’ increasingly important UK commercial sales business under pressure from the supermarket price war, sending pre-tax profit down 10% to a not-as-bad-as-feared £6.5m. Charles Stanley analyst Peter Smedley added Thorntons had needed to deal with “unprecedented, seismic shifts” among its key commercial customers. However, he noted rival Lindt had prospered in the period, with double-digit sales growth in the UK and market share gains in important Thorntons product categories. “We wonder whether Thorntons has suffered disproportionately because of its relatively very high SKU count, and will continue to do so, from some of the supermarkets significantly reducing the number of SKUs offered,” Smedley said.
A stock that certainly isn’t undervalued is that of high street baker Greggs, which continued its remarkable turnaround with a 4.5% leap in like-for-like sales and record profits of £58.3m in the year to 3 January. Its share price soared 10.6% on the day of the results and another 3.6% on Thursday morning to 997.6p. The £1.23 rise tipped the chain’s market cap past £1bn, up from £889.2m at the start of the week.
Elsewhere, the City took kindly to Vimto maker Nichols outperforming the soft drinks market, with sales up 3.5% to £109.2m. Its shares rose 3.7% to 1,118p as a result. But investors looked less favourably on c-store chain McColl’s, which fell 4.7% on Tuesday after its slim like-for-like revenue growth of 0.7% in 2014 declined since the year end to -1.2% in the 13 weeks to 1 March.
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