The Works “well positioned” for Christmas trading period
The Works has said it is well positioned for Christmas as it announced that it had finished its financial year in line with market forecasts with EBITDA declining to £6 million from £9 million in the previous year.
In the 53 weeks to 5 May, revenue edged up 0.9% to £282.6 million despite a “tough” trading environment and operational challenges.
Store sales, which account for around 90% of the retailer’s total, increased by 0.6% on a like-for-like basis.
Meanwhile, online like-for-like sales declined by 12.4%, which meant that overall like-for-like sales fell by 0.9%.
The value retailer of arts, crafts, toys, books and stationery said sales were lower than anticipated early in the year, which combined with increased cost headwinds, put pressure on profitability. However, improved trading in the final quarter, together with actions to grow product margins, reset its cost base and scale back non-essential investments, meant the group ended the period with EBITDA in line with expectations.
Adjusted pre-tax profit came in at £3.2 million compared to the prior year’s restated £5.3 million.
Gavin Peck, chief executive of The Works, said: “Against a persistently challenging consumer backdrop and tough Christmas trading, we were pleased to end FY24 in line with market expectations.
“This was a direct result of the continued dedication and strong response of colleagues, the decisive action taken to improve product margins, reduce costs and scale back non-essential investments, supported by improved sales in the final quarter.”
Giving an update on more recent trading, The Works said sales have been in line with expectations in the first 21 weeks of its new financial year with like-for-like sales up 0.2%.
It also said it is on track to deliver improved profitability in FY25 and meet group compiled market forecasts of pre-IFRS16 adjusted EBITDA of £8.5 million.
Peck said: “Although consumer confidence remains subdued and we continue to face tough cost headwinds, 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 courtesy of The Works.”
In a separate announcement, The Works said John Goold and Mark Kirkland, both non-independent non-executive directors of The Works, have stepped down from the board.
Goold is chief executive at Kelso Group Holdings, which retains a 6.15% interest in The Works, while Kirkland is its chef financial officer.
In a statement, Goold and Kirkland said: “We joined The Works board on a temporary basis to provide additional guidance as the business underwent a period of change.
“Since then, significant progress has been made, namely transferring from the Main Market to AIM and strengthening the leadership team.
“We are content to step down now, knowing that the company is on a path to growth and with full confidence in the management team.”
