The Works posts profit fall but says strategy bearing fruit

Delayed results showed The Works generated adjusted pre-tax profit of £10.1m last year, down from a restated £16.5m the year before, in a period during which business rate costs increased by £5.8m as Covid-19 assistance ended.

Sales rose 5.8% to £280.1m in the year to April 30. Store sales “strengthened as the year progressed”, generating a like-for-like advance of 7.5%, while online sales fell 15%.

A “strategic change in the sales mix” and higher freight costs hit gross margin by 170 basis points.

Chief executive Gavin Peck said: “The Works delivered a resilient performance, despite facing some sizeable challenges. Revenue growth was driven by our strong portfolio of stores, bolstered by the sector-wide shift of customers returning to shop in-store post-Covid.

“Although inflationary pressures increased business costs and dampened consumer confidence, we ended the year in line with our rebased expectations. [The year] also showcased the enduring appeal of our value proposition.

“In the first half, our focus was on protecting and rebuilding the business but as the year progressed we were able to make more strategic progress. We have developed our brand and customer proposition, ensured that our range is aligned with customer demand and improved our store estate. We’ve also taken steps to enhance our online proposition and drive significant operational improvements across the business.

“Looking ahead, the macroeconomic environment remains uncertain. However, we are now well positioned to capitalise on strategic opportunities and given the momentum gained in the latter half [of last year], we expect to grow sales and profit [this year].”