The Works today set out how it plans to develop online and in-store as it aims to become a “go-to destination for reading, learning, creativity and play” as it reports full-year sales growth and a return to profit. Fast in-store sales growth offset a significant decline in online sales – although these remain well ahead of pre-Covid-19 levels.
The discount books to arts and crafts retailer is now investing as it looks to reach time-poor customers online, while also improving the location and in-store experience of its shops. It is improving its product range while building customer relationships to boost brand loyalty with existing customers and attracting new ones as well.
The Works today reported revenues of £264.6m in the 52 weeks to May 1 2022. That’s 46.5% higher than the previous year, which was affected by Covid-19 store trading restrictions. On a like-for-like (LFL) basis – which strips out the effect of store and business openings and closures – sales of £261m were 36.6% ahead of the same time last year. Within that, online sales fell by 32%.
However, compared to its 2020 financial year, which largely fell before Covid, sales were 10.5% ahead, following growth both in-store (+3.7%) and online (+69.7%). Pre-tax profits of £10.2m represented a recovery from a loss of £2.8m a year earlier.
In the first 20 weeks of the current financial year, to September 18 2022, total sales were 2.3% ahead of last year. LFL sales were 0.8% ahead, with a 4% rise in store LFL but a 21.7% decline in online sales.
The Works chief executive Gavin Peck says the retailer delivered a strong performance with sales and profit growth ahead of pre-Covid levels.
“Since our last update in August, our online performance has gradually improved and we continue to be encouraged by store sales, which comprise the significant majority of our revenue and have delivered positive LFL sales growth since June,” says Peck. “This has all been supported by the ongoing evolution of our proposition, including a strong performance of our improved ‘Back to School’ range. We have also had significant growth in our books category, driven by our increased representation of front-list authors including Julia Donaldson and Richard Osman. We are well-placed operationally for Christmas and are gearing up to deliver for our customers, maintaining our commitment to provide them with the products they love at fantastic value.
“The Works is a resilient business with a proven track record of delivering robust results during times of economic hardship, however, given current conditions, we maintain our cautious view of the year ahead. We remain confident in our ability to continue making good strategic progress and to deliver growth in the medium-term.”
The retailer says that in 2022 it improved its fulfilment and delivery capacity to give “time poor” customers faster delivery times, extending its next-day delivery cut off from 8pm to 11pm while cutting its standard delivery window to three days – it had previously between ‘between three and five days’. It started to optimise a platform launched in July 2020, improving navigation and reducing clicks to purchase, and it hired a head of digital marketing to develop campaigns across new channels.
In the current financial year, it aims to better understand the customer journey and its friction points and use that knowledge to improve site merchandising and navigation. It is also extending its range online, while using digital marketing to target customers. The Works says it will focus on the multichannel experience by enabling shoppers to order online in-store and reviewing its click and collect journey. In addition, it is adding about 11,000 new pick up points by adding the Parcelshop network as a delivery option.
The Works will continue to refit its stores – of which it had 525 as of May 1, two fewer than the previous year following five openings and seven closures. It also aims to improve the in-store experience, with better navigation and ensuring stock is within customers’ reach. In the coming year it plans to open new stores at the top locations where it does not yet have them, while improving a further 40 stores either through refits or relocations.
During the last year The Works stepped up its IT security following a cyber-security incident in March 2022. It says it believes it has now significantly reduced the possibility of future cyber attacks. The Works is ranked Top100 in RXUK Top500 research.