TIDMWRKS
RNS Number : 1809M
TheWorks.co.uk PLC
20 May 2022
20 May 2022
TheWorks.co.uk plc
("The Works", the "Company" or the "Group")
Trading update for the 52 weeks ended 1 May 2022
TheWorks.co.uk plc, the multi-channel value retailer of arts,
crafts, toys, books and stationery, announces a trading update for
the 52 weeks ended 1 May 2022 (the "Period" or "FY22").
Highlights
-- Strong trading performance; two-year LFL(1) sales increase of 10.4% and total two-year sales
growth of 12.7%(1),(2) .
-- Improved proposition helping to offset external headwinds; FY22 EBITDA forecast of GBP15.0m
is reiterated.
-- Strong financial position: net cash(3) of GBP16.3m at the Period end, an increase of GBP15.5m
during FY22.
-- Dividend re-instated; the Board expects to recommend a dividend of approximately 2.4 pence
per share alongside its FY22 results in September and maintain a progressive dividend policy
thereafter.
FY22 trading performance
The Works delivered a strong trading performance in FY22, well
ahead of pre-COVID levels. Total sales(2) for the Period increased
by 12.7 % compared to FY20 (i.e. compared to two years ago).
Two-year LFL sales increased by 10.4 %, with positive growth
continuing both online and in stores.
Sales since our last update in January 2022 have been driven by
the further development of our customer proposition, in particular
the expansion of our front list book ranges, which has coincided
with the emergence of the "BookTok" phenomenon. By capitalising on
this trend, we have been able to draw attention to previously
best-selling books and prompt renewed customer interest in them.
Branded toys and games have also continued to perform strongly,
through reinforcements to our ranges of, for example, Peppa Pig,
Paw Patrol and Cocomelon.
Following the strong first half and record Christmas trading
performance, two-year LFL sales during the final months of the
financial year remained positive although, as expected, the rate of
growth has been lower than before Christmas. Consumer spending is
widely reported to have slowed in recent months and we believe this
has had an impact on our sales. In addition, as noted in the
announcement on 5 April 2022, we experienced some limited
disruption to trading and business operations as a result of a
cyber security incident at the end of March. Despite these
headwinds, the operational and propositional improvements we have
made throughout the year have helped to offset the impact of the
external headwinds noted above, meaning that the FY22 EBITDA
forecast of GBP15.0m is retained .
Furthermore, with our strategic focus on being a "better, not
just bigger" version of ourselves, during FY22 we continued to
improve the quality of the store estate, opening 5 new stores,
closing 7 and relocating 6 stores. The business traded from 525
stores at the end of the Period.
Financial position
The Group ended the Period in a strong financial position, with
net cash(3) of GBP16.3m (FY21: GBP0.8m). This is higher than the
GBP10.0m level noted in the FY22 Interim results statement, due to
the unwinding of certain working capital timing differences taking
longer than anticipated.
Dividend
In the Interim results announcement dated 21 January 2022, the
Board noted its intention to reinstate the payment of dividends
provided the final FY22 results were as expected. Accordingly, the
Board currently expects to recommend to shareholders the payment of
a final dividend in respect of FY22, following the 2022 AGM. The
amount to be recommended will be confirmed once the audit is
completed, but is expected to be approximately 2.4 pence per share.
Once the payment of dividends has been reinstated, the Board
intends to maintain a progressive dividend policy.
Outlook
There continues to be uncertainty relating to the external
environment and how this might affect levels of consumer spending
in the months ahead. This has been taken into account in setting
the Group's internal plans for FY23.
The Board remains confident in the future prospects of the
business because of the underlying appeal and relevance of The
Works' proposition, the opportunity to grow sales profitably
through the implementation of its strategy , and the Group's strong
financial position.
Gavin Peck, Chief Executive Officer of The Works, commented:
"We are pleased to report strong trading in FY22, consistently
delivering sales well ahead of pre-COVID levels and another record
Christmas. This performance, and the resilience that our business
has shown against a challenging external backdrop, demonstrates the
positive effect of our "better, not just bigger" strategy, which
still has a lot more upside to deliver. We are delighted that our
improved trading performance will enable us to recommend
reinstating the dividend and remain optimistic that we can deliver
further sales growth in the year ahead."
"As we move into our new financial year, general trading
conditions remain challenging. We will continue to focus on the
factors within our control and ensure that, as customers face
increasing cost-of-living pressures, they can continue to rely on
The Works as a destination for great value products to inspire
reading, learning, creativity and play. None of this would be
possible without the passion, commitment and patience of our
brilliant colleagues, who have gone above and beyond to deliver for
customers."
Full year results publication
The cyber security incident in April 2022 had a limited impact
on trading, but has prompted the decision to significantly speed up
the implementation of plans to strengthen our IT security measures.
Given the additional time needed to implement these improvements,
the Group plans to allow more time to finalise its FY22 results,
which will be issued during September 2022.
Enquiries: via Sanctuary Counsel
TheWorks.co.uk plc
Gavin Peck CEO
Steve Alldridge CFO
Sanctuary Counsel +44 7944 868288 | theworks@sanctuarycounsel.com
Ben Ullmann +44 7918 606667 |
Rachel Miller
(1) The like for like (LFL) sales increase has been calculated with reference to the FY20 comparative
sales figures, or two-year LFL, because the extended periods of enforced store closures during
FY21 prevent that period from forming the basis of meaningful comparisons. For the last 5
weeks of the Period, it has been necessary to calculate the LFL percentages with reference
to the corresponding weeks in FY19, because the equivalent weeks during FY20 were also affected
by the first period of enforced store closures. Similar comparison periods are also used for
the total sales growth figures quoted.
(2) "Total sales" referred to in this statement includes VAT and is stated prior to deducting
the cost of loyalty points which are adjusted out of the sales figure in the calculation of
statutory revenue. The 52 week comparison period used for the LFL and total sales growth calculations
uses a literal mapping of calendar weeks between FY22 and the corresponding 52 weeks two/three
years prior. Due to the inclusion of a 53(rd) week in the FY21 accounting period, the FY20/FY19
statutory accounting periods are one week offset from the 52 week period used in the LFL and
total sales comparisons. A reconciliation between the figures included in this statement and
the FY22 statutory revenue will be included in the Group's Annual Report.
(3) Net cash at bank excluding finance leases and on a non-IFRS 16 basis.
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