Chocolate retailer Thorntons has insisted its turnaround plan still had some way to go, despite reporting a better-than-expected rise in annual profits.

The 36 per cent improvement to £7.1 million came as Thorntons benefited from new products and a drive to improve its store and online offerings.

Chief executive Mike Davies described the past year as significant but said the next year would be crucial in ensuring sustainable future growth.

He said: "Thorntons is an excellent business with many strengths but needs significant change to realise its potential. I am very encouraged by the positive response from our customers to the changes we have made so far. However, I am also acutely aware that we have only just started."

The last financial year saw Derbyshire-based Thorntons introduce organic truffles and single origin chocolates, as well refresh it seasonal offerings with new products.

It said it also planned to reintroduce "old favourites" that had been withdrawn from sale because customer feedback had shown there was still a healthy demand for them.

"This autumn we will be reintroducing these chocolates and increasing the choice in our larger boxes of Continental from 27 to 53 different chocolates," the group said.

"We are also bringing back a Belgian collection which, in keeping with our commitment towards better presentation, will be boxed in new and exciting packaging."

The majority of Thorntons' store portfolio has also been refurbished, with 227 stores and cafes upgraded at a cost of £1.4 million.

Trading in the financial year got off to a slow start, but recovered as stores achieved a 7.2 per cent improvement in like-for-like sales in the fourth quarter.

The revival also extended to commercial customers, such as supermarkets. This area of the business grew turnover by 18.5 per cent to £37 million, which Thorntons said reflected an increased range of products towards the end of the period.

Thorntons Direct, the company's online business, grew sales by 22.9 per cent to £6.8 million, helped by a new website and additional choice for customers.

Mr Davies said: "As more and more shopping is done online I am confident that we will continue to see strong growth in this important channel."

He joined the company in October after a long career at senior executive level with confectionery giant Mars.

Thorntons traces its roots back to 1911 when Joseph William Thornton opened a sweet shop in Sheffield with his teenage son.

Overall, revenues increased by 5.3 per cent to £186 million.

In reaction, Numis - setting a 185 pence target price - said Thorntons' pretax profit came in below its forecast of £7.6 million, although the broker noted that own shop sales were up 1.7 per cent, while franchise sales rose 1.5 per cent.

Numis said that Thorntons' operating costs rose by 8.6 per cent, although the broker said this includes £4 million of investment costs.

The broker added that the company has not given specific numbers on current trading, but does say that the board is pleased with the continuing progress of the company during the opening weeks of the new financial year, with Numis saying it expects sales growth for the whole of 2008 of 3.6 per cent.