TIDMWRKS
RNS Number : 8618S
TheWorks.co.uk PLC
09 November 2023
9 November 2023
TheWorks.co.uk plc
("The Works", the "Company" or the "Group")
Half-year trading update for the 26 weeks ended 29 October
2023
The Works, the multi-channel value retailer of arts, crafts,
toys, books and stationery, announces an update on trading for the
26 weeks ended 29 October 2023 (the "Period" or "H1 FY24").
Trading update
In the first half of FY24 The Works delivered total sales growth
of 3.4% and a total LFL sales increase of 1.6%. Store LFLs
increased by 3.5%, whilst online sales declined by 12.2%.
The macro-economic environment was challenging throughout the
period, characterised by high inflation and low consumer
confidence. In the nine weeks since our previous update, consumer
demand has softened further and, combined with unseasonable weather
conditions, this has caused reduced footfall.(1) We have seen a
slowdown in the rate of store LFL sales growth as a result,
particularly in October although, conversely, the online LFL has
improved.
Mindful of this trading environment, we have reviewed all areas
of activity, including implementing additional promotions and
taking mitigating action to reduce costs where we can, whilst also
gearing up to deliver excellent value for customers this
Christmas.
Outlook
As always, trading in the six weeks between now and Christmas
will have a significant bearing on the overall result for the
financial year. Last year, consumers left Christmas shopping until
very late in the season, and we expect that sales may follow a
similar pattern this year. As such, any forecast prepared at this
stage includes a high degree of uncertainty.
We anticipate that trading conditions during H2 FY24 will remain
challenging and consumer spend will be subdued , resulting in the
continuation of the increased levels of discounting recently seen
across the sector. To ensure that we offer the best value to our
customers, we expect to maintain a higher level of promotional
activity than envisaged at the outset of the year. We will also
continue to take action to reduce costs.
Taking into account the level of uncertainty with regard to
sales, and our expectation that it will be necessary to continue to
maintain a higher than planned level of discounting to remain
competitive, we have revised our estimate of the likely full year
result for FY24, and now expect that the pre IFRS 16 Adjusted
EBITDA will be approximately GBP6.0m . (2)
Financial position
The Group had net bank borrowings of GBP2.5m at the Period end,
reflecting the build of stock prior to the peak trading season, and
the corresponding low point in cash levels. There was GBP17.5m of
headroom within our GBP20.0m bank facility.
CFO succession
It was announced at the Preliminary results on 30 August 2023
that Rosie Fordham, Head of Finance at The Works, would succeed
Steve Alldridge as CFO by the end of December 2023 following an
orderly handover process. We confirm that Rosie will assume the
position of CFO and join the Board of Directors on 31 December
2023.
Gavin Peck, Chief Executive Officer of The Works, commented:
"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.
"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."
Interim results notification
The results for H1 FY24 and an update on Christmas trading will
be announced on Thursday, 18 January 2024.
Enquiries: via Sanctuary
Counsel
The Works
Gavin Peck CEO
Steve Alldridge
CFO
Sanctuary Counsel | 020 7340 0395
Ben Ullmann | theworks@sanctuarycounsel.com
Rachel Miller |
Kitty Ryder
Footnotes
(1) For example, the BRC (British Retail Consortium) footfall
data for October, which reported a 5.7% year on year decline
in footfall, compared with a 2.9% year on year decline
in September ( link ).
(2) The Company compiled estimate of the market's expectation
for the FY24 pre IFRS 16 Adjusted EBITDA result prior to
this announcement was approximately GBP10.0m.
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No 596/2014.
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END
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November 09, 2023 02:00 ET (07:00 GMT)
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