‘Resilient’ sales see half-year revenue up 2.4% for The Works but costs having impact 

The Works saw revenue growth of 2.4% in the 26 weeks to 30th October 2022 thanks to a resilient sales performance against “a challenging consumer backdrop", with store like-for-like sales growing by 3.5% in the period.

According to the retailer’s latest trading update and interim half-year results, online sales declined by 16.9%, however, resulting in overall like-for-like growth of 0.6%. It noted that this was still 50% above pre-Covid levels for online sales.

The update reported that, “as expected”, earnings before interest, taxes, depreciation and amortisation (Ebitda) saw a loss of £6.4m during the 26 weeks to 30th October compared with a £2.5m profit in the same period in 2021. This was  attributed to the “residual impact of the cyber security incident” in March 2022 and “cost headwinds" including freight, inflation and the normalisation of business rates charges, which represented £3.9m of additional cost.

Overall, loss before tax in the period stands at £10.7m compared to £1m in the same period in 2021. The company said that due to the seasonal nature of the business, The Works typically makes a loss in the 26 weeks ending 30th/31st October, with the year’s profit generation being strongly focused on the peak Christmas trading period.

Despite “heightened level of uncertainty regarding consumer spending over the remainder of the financial year, the board’s expectations for the overall full year result are unchanged, despite the recent increase in like-for-like sales", the report continued.

Regarding the company’s performance over Christmas 2022, the trading update for the 11 weeks ended 15th January 2023 outlined like-for-like sales growth in the period of 5.7% compared to 2021, with store sales growing by 9.7% and online sales declining by 14%.

The company stated: “We are encouraged by the store sales performance, which was expected to strengthen as the comparatives from the previous year weakened, having been affected by concerns regarding the Omicron Covid-19 variant and supply chain disruption. Store sales were particularly strong in the week immediately prior to Christmas, suggesting that consumers shopped much later than in 2021 and that many were seeking value when shopping for gifts."

Store sales since Christmas have continued to be strong as The Works entered its January sale and post-sale. “We will continue to improve our product proposition with strong new seasonal and own-brand range launches, which we expect to drive stronger trading compared with last year," the report stated. 

Online sales have, however, continued to be disappointing. “Online sales softened in the run-up to Christmas, which we believe was due to consumers losing confidence in retailers’ delivery promises in light of the widely reported postal strikes and the potential for knock-on effects on other carriers" the report said. 

Gavin Peck, c.e.o of The Works, said: “The Works delivered a resilient performance in the first half against the backdrop of an increasingly challenging consumer environment. This reflects the durability of the business, the relevance of our value proposition, the progress we are making in delivering our ’better, not just bigger’ strategy and the relentless efforts of our colleagues.

“We have not been immune from the economic headwinds affecting the retail sector, including higher costs which impacted our profitability in the first half. Although trading conditions were more difficult, we were still pleased to see cost-conscious customers buying into our value offering, which enabled us to deliver positive sales growth overall.

“Whilst the trading environment remains uncertain, we are encouraged by the strength of our performance during and after the key Christmas period and believe there is significant value to be created from delivering on our strategy in the medium-term. This is what we will be focussing on during the upcoming period, and we feel well placed to capitalise on the many attractive opportunities that lie ahead.”