The Works returns to profit as lack of Covid rules brings customers back to stores

Discount retailer The Works has returned to profit after the reopening of its stores led to a significant uptick in sales and the group set another Christmas record.

After a loss of £2.3m in the previous financial year, the book, craft and stationery seller recovered to a profit of £8.7m for the 12 months ended May.

Both annual revenues and revenues surpassed pre-pandemic levels, with the latter rising 46.5 per cent to £264.6 million, thanks to robust operations throughout the period in stores and online.

The summer of 2021 was a particularly good time for the Warwickshire-based company, as the release from pent-up demand and above-average sales helped attract customers back to its stores.

This was complemented by increasing orders for ‘fidget frenzy’ products, such as fidget spinners and neon balls, and school supplies ahead of the start of the academic year.

The Works said it was then entering its best-ever Christmas season, as many customers made their festive purchases in September and October, and despite a supply chain disruption that delayed the arrival of some festive accessories.

Trade was hit in the new year due to low inventory volumes, and The World was further hit by a cyberattack that slowed the delivery of online orders and forced the company to close some outlets.

However, the group still reported high demand for branded games, toys, and newly released books in the wake of the January sale.

Popular authors with clients included television quiz show host Richard Osman, whose crime novels, The Thursday Murder Club and The Man Who Died Twice, were both Sunday Times bestsellers.

After the release of today’s trading update, TheWorks.co.uk Shares rose 32.9 percent to 38.4 pence by late afternoon, though their value has plunged about 46 percent so far this year.

The company revealed that overall revenues have continued to grow since early May, despite online sales falling by more than a fifth as the lack of lockdown restrictions has encouraged more Britons to return to the high street.

But it has chosen to keep its full-year forecasts at current levels, given existing inflationary pressures and uncertainty about future consumer spending against a more subdued economic backdrop.

Chief executive Gavin Peck said: “We are operationally well positioned for Christmas and gearing up to deliver for our customers, while remaining committed to bringing them the products they love at a great price.

“The Works is a resilient company with a proven track record of delivering robust results in times of economic adversity; given the current circumstances, however, we maintain our cautious view on the coming year.

“We remain confident in our ability to continue to make good strategic progress and achieve medium-term growth.”