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8
September 2011 | Adam Leach
Confectioner
Thorntons expects
to cut costs by £2 million in 2012/2013 as a result of changes to procurement.
The
savings will be delivered as a result of the company's move to outsource its
warehousing and distribution activities and the overall restructuring of costs
at its head office. The company renegotiated its IT outsourcing contract in
2010.
According
to company results for the year ending 25 June 2011 published yesterday, the
chocolate retailer said by implementing a forward purchasing strategy, where it
bought cocoa in bulk in advance, it was able to avoid being hit by additional
costs when political instability in the
Ivory Coast led to a spike in prices.
Jonathan
Hart, chief executive, Thorntons, said in a statement: “This is one of a number
of strategies that we have deployed to mitigate these price increases.
Improvements in our procurement approach combined with product and ingredient
re-engineering have also continued to help us reduce some, though not all, of
these effects.”
While
its forward purchasing approach was successful in avoiding harm from escalating
cocoa prices, the retailer has suffered from increases in the price of both
sugar and dairy products. During the past year, dairy increased by more than 20
per cent and sugar – which hit a 30-year
high in February – increased by more than 50 per cent.
Thorntons
also invested £4.5 million in its supply chain and IT operations last year. The
majority of the money was used to complete a new production line and purchase
new manufacturing tools, the remainder was spent on improvements to the supply
chain and IT.
But
overall, the company reported a loss of £1.1 million before tax for the trading
year, despite increasing revenues from £214.6 million to £218.3 million.