The Works says it believes slowing consumer spending has affected its sales amid the challenging conditions of recent months, following a strong start to its financial year and record Christmas trading. A new ‘Book Tok’ trend on TikTok has helped the value retailer to highlight previous bestselling titles to customers that are now trending on the social media site. It is also seeing strong sales of branded toys and games as it expands ranges including Peppa Pig and Paw Patrol.
The retailer says it has made improvements to its customer-facing business that has helped it to offset external headwinds including falling consumer demand and “limited disruption to trading and business operations” that was caused by a cyber security incident at the end of March. At the time, the retailer temporarily closed a small number of stores as a result of the attack, and warned of delays to online deliveries. Now it has decided to bring forward IT security measures, with the knock-on effect that the company’s full-year figures will now be reported later than planned, in September 2022.
Today The Works today says that sales in its latest full-year, the 52 weeks to May 1 2022, were, in total, 12.7% ahead of the same time two years ago, and 10.4% ahead on a like-for-like (LFL) basis that strips out the effect of store openings and closures. The retailer is making the comparison with the year to May 2020 to exclude the effect of Covid-19 lockdown closures on its business last year, and it has also calculated the LFL figure for the weeks of the 2020 year that were affected by lockdown in comparison with the same period in 2019. Full-year store and online sales were ahead of these comparator periods.
Earnings before interest, tax and asset write downs (EBITDA) are expected to come in at £15m, as previously forecast.
Gavin Peck, chief executive of The Works, says: “We are pleased to report strong trading in FY22, consistently delivering sales well ahead of pre-Covid levels and another record Christmas. This performance, and the resilience that our business has shown against a challenging external backdrop, demonstrates the positive effect of our ‘better, not just bigger’ strategy, which still has a lot more upside to deliver. We are delighted that our improved trading performance will enable us to recommend reinstating the dividend and remain optimistic that we can deliver further sales growth in the year ahead.
“As we move into our new financial year, general trading conditions remain challenging. We will continue to focus on the factors within our control and ensure that, as customers face increasing cost-of-living pressures, they can continue to rely on The Works as a destination for great value products to inspire reading, learning, creativity and play.”
By the end of the year, The Works traded online and from 525 shops, following five openings, seven closures and six relocations. The Works is ranked Top100 in RXUK Top500 research.