The Works ‘well positioned’ for Christmas despite flat sales and falling profits in ‘challenging’ year

The variety retailer reported adjusted EBITDA of £6m for the 53 weeks to May 5, 2024, down from £9m last year.

The Works posted total revenue growth of 0.9% to reach £282.6m and a 0.9% decline in like-for-like sales against a “challenging backdrop” driven by the cost-of-living crisis and ”softened” consumer demand.

Store sales, which account for 90% of The Works’ total sales, were up 0.6% on a like-for-like basis during the year, despite online like-for-like sales falling by 12.4%.

The Works said sales were “lower than originally anticipated” and the retailer noted operational challenges in the lead-up to Christmas, which increased pressure on its profitability.

The Works opened nine new stores during the year and carried out five relocations and 21 refits to “improve the quality” of its store estate.

The retailer highlighted leadership changes made during the year and said it is now “more agile and better positioned” to deliver on its growth strategy.

In terms of outlook, the company said it is “well positioned” ahead of the peak Christmas trading period and sales for the first 21 weeks of the 2025 financial year have been “in line with expectations”.

While the value retailer said it is yet to see improved consumer confidence impact the business, it is “on track” to deliver improved profitability next year and reach market forecasts of adjusted EBITDA of £8.5m.

Chief executive Gavin Peck said: “Against a persistently challenging consumer backdrop and tough Christmas trading, we were pleased to end FY24 in line with market expectations. This was a direct result of the continued dedication and strong response of colleagues, the decisive action taken to improve product margins, reduce costs and scale back non-essential investments, supported by improved sales in the final quarter.

“Good strategic progress was made during the year and while we believe this continues to be the right high-level strategic direction for The Works, we also believe that now is the right time to evolve the strategy. Work is therefore underway to refine our plans to transform the business and drive improved performance and shareholder returns in the years ahead.

“Although consumer confidence remains subdued and we continue to face tough cost headwinds, the cost and operational action we have taken and the trajectory of recent trading means we are well positioned to offset these and return to profit growth in FY25. Operationally we are in a much stronger position this year as we head into the upcoming peak Christmas trading period and we look forward to supporting customers to have a Christmas well spent courtesy of The Works.”