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Thorntons aims for £2m savings from outsourcing

Chocolate company aims to invest further in online channel, while shutting physical stores

Thorntons, the chocolate manufacturer and retailer, has revealed that its IT and other outsourcing activities should help deliver an annual cost saving of £2 million.

The company signed a six-year deal with HP Enterprise Services for IT services in September last year. HP provides end-to-end management and support for IT, networking and applications for the company under the multi-million pound deal.

In its preliminary results for the year ended 25 June 2011, Thorntons said that renegotiating its IT services outsourcing contract in 2010 and the recent completion of the outsourcing of its warehousing and distribution activities under a six-year contract have contributed to the savings.

"This, together with the ongoing benefits of our procurement review and the recent restructuring of our head office cost base, should deliver a full-year benefit of £2 million that will flow through in full in the 2012/13 financial year," Thorntons stated.

Despite seeing revenues increase by 1.7 percent from £214.6 million in 2010 to £218.3 million this year, the company has experienced a "challenging year", however. The company reported a 38 percent fall in pre-tax profit, from £6.9 million in 2010 to £4.3 million this year.

Nonetheless, the company said that the revenue increase and the growth of Thornton's share of the UK chocolate market to around 7.7 percent demonstrated the benefits of its multi-channel strategy.

It plans to boost investment in its online, Thorntons Direct, channel, as it reduces the number of physical stores by 180, to leave between 180 and 200 stores. Thorntons' online channel made £9.6 million in sales in 2011, up 4.3 percent from £9.2 million last year.

"Our Thorntons Direct channel will continue to grow in line with the online gifting market. We will invest further in our website and in new customer relationship management systems as we start to align the direct consumer element of this channel with our Own Stores channel," the company said.

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