The Works drops profit guidance by £4m

In its half-year results today, the value retailer said it now expected pre-IFRS 16 Adjusted EBITDA to be £6m, versus the £10m it had previously forecast. 

The Works grew sales 3.4% during the 26 weeks ending 29 October, with total like-for-like sales increasing 1.6%, store like-for-likes up 3.5%. However, online sales dropped 12.2%. 

In a statement to the City, the retailer said that it found customer demand had softened further, and combined with unseasonable weather, had caused a drop in footfall and slowed sales. 

However it stated it was ’mindful of this trading environment’ and it reviewed all areas of activity, including implementing additional promotions and taking mitigating action to reduce costs, in the run-up to Christmas. 

The Works chief executive Gavin Peck said: “The first half of the year has been challenging for the retail sector as cost-of-living pressures continued to weigh on households. We have focused on delivering excellent value for our customers, adapting as best we can to the tough trading conditions, and I am proud of the way our colleagues have rallied together and responded.

“Consumer sentiment softened towards the end of the period, which resulted in early discounting across the sector and increased uncertainty as we head into the Christmas period. Recognising the competitiveness of the market we have responded with more promotional activity, which we expect to continue as we approach Christmas.

“Families will want to celebrate Christmas affordably and our value proposition makes us an ideal choice for them.”

He added: “Market conditions remain challenging and given the level of uncertainty in trading and forecasting we believe it is now prudent to moderate our expectations for FY24. Despite this short-term volatility, we believe that our ‘better, not just bigger’ strategy has the potential to deliver profitable growth in the medium and long-term.”