The Works eyes growth following bumper Christmas despite deepening losses

In its interim results for the 26 weeks to October 30, 2022, The Works’ losses deepened to £10.7m, up from £1m in the previous period. Sales for the half grew 2.4%. 

Like-for-like sales for the 11 weeks ending January 15, 2023, rose 5.7%. Store sales climbed 9.7% as customers came back to the high street, while online sales declined by 14% year on year.

Chief executive Gavin Peck said: “EBITDA performance was affected by lower than expected sales growth and significant year-on-year cost increases, most notably business rates, freight, payroll and energy cost inflation.

“It is important to note that, due to the seasonality of the business, the first half of the financial year is typically loss-making, with a substantial proportion of our profits generated in H2, which includes Christmas trading.”

As customers flocked to the high street over Christmas, Peck believes more investment should be made into The Works’ stores.

He said: “For the next few years, we will be focused on optimising our stores as we have 130 that need upgrading.

“Online is still significantly bigger than it was before the pandemic. Our online sales are 50% higher than they were three years ago.

“The step back against online in 2022 was probably due to people becoming more comfortable shopping in stores since Covid, and the Royal Mail strikes had an impact.”

The retailer has also been performing well in terms of back-to-school offers and its own-brand products, which are cheaper than the third-party products it supplies.

Peck said: “For the coming year, a small growth in profit should be seen. We had a record back-to-school last year and we believe this can be bigger, so we have invested again for this year. I think we’re increasingly becoming a destination for students and great-value products. 

“Our own-brand offering enables us to offer great value for money, so we expect customers to transfer into our own-brand if they are looking to save money.”