- The Works reported its like-for-like turnover dropped by 0.9% last year
- Online sales declined by 12.4% as the company hiked delivery charges
Discount retailer The Works said it was ‘well-positioned’ for profit growth this year amid improving trade in recent months.
Despite restrained levels of consumer spending and non-food retail sales across the UK, the books and stationery seller reported its like-for-like turnover tipped up by 0.2 per cent in the 21 weeks ending 29 September.
This follows a 0.9 per cent drop over the 53 weeks ending 5 May, caused by online sales declining by 12.4 per cent as the group hiked delivery charges and the free delivery threshold.
Good read: Discount retailer The Works said it was ‘well-positioned’ for profit growth this year
Total revenue still increased by £2.5million to £282.6million, yet adjusted earnings before nasties plunged by a third to £6million as sales were weaker than expected.
The Works said rising inflation and cost-of-living pressures led to greater volumes of discounting across the retail sector.
This particularly impacted the company during the peak Christmas trading season, when stock flows were also briefly disrupted by the shortage of space at a major distribution centre.
However, the Warwickshire-based firm said it was well-prepared for the upcoming festive period, having dealt with the capacity problems at its warehouse.
It believes sales will benefit from ‘exciting new product ranges,’ including book releases and its 2 for £12 gifts deal.
In addition, the group thinks rising product margins and cost savings will help it achieve higher profits this financial year.
The Works closed 24 predominantly loss-making or low-profit stores last year after failing to agree better terms with landlords, leaving it with 511 outlets at the end of September.
Gavin Peck, chief executive of The Works, said that despite cost headwinds and weaker consumer confidence, ‘the cost and operational action we have taken and the trajectory of recent trading means we are well-positioned to offset these and return to profit growth in FY25.
‘Operationally we are in a much stronger position this year as we head into the upcoming peak Christmas trading period and we look forward to supporting customers to have a Christmas well spent.’
The Works further announced that two non-executive directors, John Goold and Mark Kirkland, had stood down with immediate effect.
Goold and Kirkland are CEO and finance boss, respectively, at Kelso Group Holdings, which owns a 6.15 per cent stake in The Works.
The pair said they joined temporarily ‘to provide additional guidance as the business underwent a period of change,’ including the transfer of its listing from the Main Market to AIM.
Following the trading update, TheWorks.co.uk shares rose 4.2 per cent to 25p by early Tuesday afternoon, although they have slumped by over a third since last November.
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