Discount retailer The Works ‘well positioned’ for higher profits
- The Works reported that like-for-like sales fell 0.9% last year
- Online sales fell 12.4% as the company increased delivery costs
Discount retailer The Works said it is “well positioned” for profit growth this year, as trading improved in recent months.
Despite subdued consumer spending and non-food retail sales in the UK, the books and stationery seller reported that its like-for-like sales rose 0.2 percent in the 21 weeks ended September 29.
This follows a decline of 0.9 percent for the 53 weeks ending May 5, partly driven by a 12.4 percent decline in online sales as the group increased delivery charges and the threshold for free delivery.
Good to read: Discount retailer The Works says it is ‘well positioned’ for profit growth this year
Total sales still rose by £2.5m to £282.6m, but adjusted pre-nasties profits fell by a third to £6m as sales were weaker than expected.
The Works said rising inflation and cost-of-living pressures have led to wider discounts in the retail sector.
This particularly affected the company during the peak Christmas season, when stock flows were also briefly disrupted by the lack of space in a large distribution centre.
However, the Warwickshire-based company said it was well prepared for the upcoming festive period after addressing capacity issues at its warehouse.
The company believes sales will benefit from ‘exciting new product ranges’, including book releases and the 2 for £12 gift deal.
Moreover, the group believes that rising product margins and cost savings will help it achieve higher profits this financial year.
The Works closed 24 mostly loss-making or unprofitable stores last year after failing to reach better terms with landlords, leaving 511 stores at the end of September.
Gavin Peck, CEO of The Works, said that despite cost headwinds and weaker consumer confidence, “the cost and operational measures we have taken and the trajectory of recent trading activity ensure we are well positioned to offset these and return to earnings 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 so they can have a Christmas well spent.”
The Works also announced that two non-executive directors, John Goold and Mark Kirkland, had resigned with immediate effect.
Goold and Kirkland are CEO and chief financial officer, respectively, at Kelso Group Holdings, which owns a 6.15 percent stake in The Works.
The pair said they had joined temporarily ‘to provide additional guidance as the company underwent a period of change’, including the transfer of its listing from the Main Market to AIM.
After the trading update Shares TheWorks.co.uk rose 4.2 percent to 25 cents early Tuesday afternoon, although they have fallen by more than a third since November last year.
DIY INVESTMENT PLATFORMS
A.J. Bell
A.J. Bell
Easy investing and ready-made portfolios
Hargreaves Lansdown
Hargreaves Lansdown
Free fund trading and investment ideas
interactive investor
interactive investor
Invest for a fixed amount from € 4.99 per month
Sax
Sax
Get £200 back in trading fees
Trade 212
Trade 212
Free trading and no account fees
Affiliate links: If you purchase a product, This is Money may earn a commission. These deals have been chosen by our editors because we believe they are worth highlighting. This does not affect our editorial independence.