The Works today said its online business “approximately” doubled in size during the first half of its financial year, as it launched a new web platform and expanded fulfilment. The retailer says its multichannel approach helps it to stand out in the value sector. It remains committed to its stores, but says that it may close those that are not profitable in areas where footfall does not recover in the longer-term. And it now plans further investment online and across its sales channels.
Online growth during the first half came as The Works launched a new web platform and expanded its fulfilment capacity. It discounted less and it spent less on marketing, while making fulfilment more efficient. This “step-changed” online profitability as both prices and average order values increased, lowering the cost of fulfilment. Before Covid-19, ecommerce accounted for about 10% of The Works’ sales, but the retailer worked with its fulfilment partners to expand online capacity sooner than planned. Peak trading capacity was capped at about 70% above the previous year, and the retailer is now expanding capacity again, ahead of Christmas 2021.
Looking ahead, the retailer expects digital growth to become increasingly important and says it will invest to that end – in improving customer experience, in a new email service platform and in in-store terminals to give customers access to its wider range and to online ordering.
In the 26 weeks to October 25, the retailer, ranked Top50 in RXUK Top500 research, turned over £88.9m, 7.8% down on £96.4m a year earlier. But its losses narrowed to £4.3m from £8.5m a year earlier.
Its shops – of which it now has 532 – were closed under lockdown measures for the first seven weeks of its financial year, when sales fell 7.8% on the same time in the previous year. On a like-for-like measure – which strips out the effect of store openings and closures – sales rose by 10.6% in the following 19 weeks of the half-year – beating the board’s expectations. Over those 19 weeks, LFL store sales were “broadly level” with the same time last year, while online sales “approximately” doubled.
When stores were open, the retailer introduced a ‘beat the boredom’ offer, featuring arts, crafts, jigsaws and books. A net four stores were closed and lower rents were negotiated.
In the 11 weeks to January 10, total sales have fallen by 24.8% as stores have closed during lockdown. About 85% of its stores were closed during November and early December, with variable closures during December, before all closed again from January 5. When the effect of those temporary closures is excluded, sales rose by 23.8% over the period – with store sales continuing to grow and online sales about 70% higher than the previous year.
The Works chief executive Gavin Peck says the retailer’s performance has been robust in the context of government-mandated stores closures. “When open, our stores have performed well and our online proposition has continued to resonate strongly, supported by the investment we made to increase online capacity,” he says. “Our ability to continue to safely serve our customers and communities through these unsettling periods is thanks to the ongoing commitment and hard work of fantastic colleagues across the business, something I am incredibly proud of.
“With our stores temporarily closed, we are, once again, focussed on maximising sales through our online operations and carefully controlling costs whilst ensuring that we are able to reopen safely when restrictions allow. We are in a strong financial position to face the current challenges and we remain confident in the medium-term growth potential of the business, particularly given the evident ongoing relevance of our proposition.”
The Works says its liquidity has improved, with net cash, excluding leases, standing at £11.3m at the end of the period.
