TIDMWRKS
RNS Number : 3047E
TheWorks.co.uk PLC
05 November 2020
5 November 2020
TheWorks.co.uk plc
("The Works", the "Company" or the "Group")
Half-year trading update for the 26 weeks ended 25 October
2020
TheWorks.co.uk plc, the multi-channel value retailer of gifts,
arts, crafts, toys, books and stationery, today announces a trading
update for the 26 weeks ended 25 October 2020 (the "Period" or "H1
FY21").
Highlights
-- The Group's trading since stores reopened has continued to be strong and significantly ahead of the Board's
expectations.
-- LFL (1) sales increased 10.6% for the 19 weeks ended 25 October 2020; this excludes the 7 week period when stores
were closed.
-- Store LFL sales were broadly level with last year, with online sales approximately double last year's over the 19
week period.
-- Strong liquidity position at Period end with net cash of GBP8.4m (2) , significantly ahead of last year.
-- The Board considers that the Group has adequate resources to support the business during this new period of
increased restrictions and remains confident in the appeal of the Group's proposition.
Trading update
Sales have continued to be strong, and significantly ahead of
the Board's expectations, since the reopening of our stores in June
following the lifting of restrictions introduced in March 2020.
Total sales for the Period were down 7.1%, reflecting the impact of
the closure of all stores for the first 7 weeks of the financial
year. Excluding the first 7 weeks, overall LFL sales increased by
10.6% in the 19 weeks ended Sunday 25 October 2020, driven by:
-- Broadly flat store LFL sales, with average transaction values continuing to be higher than last year, offsetting
a reduction in the number of transactions.
-- Strong online performance with sales levels approximately double last year's in the same 19 weeks.
H1 FY21's trading performance has strengthened since our
previous update on 27 August 2020, further demonstrating the appeal
of The Works' proposition to a broad range of customers,
particularly in the current market. Board games, jigsaws, art and
craft materials and books for both children and adults have all
been in high demand.
During the Period, we closed a net 4 stores (4 stores opened and
8 closed) as part of the ongoing management and optimisation of the
store portfolio, which totalled 530 stores at the Period end.
Financial position
As a result of the strong trading performance, careful cost
management and utilisation of the available Government support
schemes, the Group's liquidity position at the end of the Period
was strong, and significantly better than at the same point last
year, with net cash of GBP8.4m, compared with net bank borrowings
of GBP14.1m at the end of H1 FY20. The Period end cash balance
included the benefit of some favourable timing differences within
working capital (estimated to be approximately GBP4.0m), which are
expected to unwind during H2 FY21.
Outlook
We have been encouraged by the performance during the Period,
which was better than the "Base Case" scenario we modelled when the
COVID-19 pandemic was in its earlier stage. Performance in recent
weeks has strengthened further and, we believe that to some extent,
sales have been brought forward as customers have acted in
anticipation of further restrictions.
Experience gained from the lockdowns earlier in the year have
been valuable in preparing for the further lockdowns or other
restrictions which have now been implemented in the UK and in
Ireland and which have or will require the closure of most of our
stores, most notably, for a four week period in England.
Furthermore, in anticipation of the continuation of very high
online sales, we have invested in increasing online fulfilment
capacity. However, and, notwithstanding these preparations, the
latest restrictions will have a material adverse effect on sales,
although the effect on the Group's profit and liquidity will be
partially mitigated by the extension of the Government's furlough
job support scheme.
Due to the Group's strong financial position on entering this
period, the Board is confident that the Group has adequate
resources to support the business, whilst retaining headroom within
its banking facilities.
In light of the high level of uncertainty, the Board will not be
issuing profit guidance for the full year FY21 at this time.
More generally, the evident appeal of the Group's proposition,
and its strong financial position, give us confidence for the
future.
Gavin Peck, Chief Executive Officer of The Works, commented:
"I have been pleased with the positive response of our customers
to our proposition which resulted in strong trading since the
reopening of our stores; the further improvement in performance in
recent weeks only serves to underline this. I would like to take
this opportunity to acknowledge the hard work and commitment of all
colleagues throughout the business, who have helped to deliver this
performance and ensured that we have continued to provide excellent
service whilst maintaining safe shopping environments.
"Naturally, it is disappointing that we have had to close most
of our stores again, so close to Christmas, but the strong
performance since the last lockdown and our sound financial
position mean we are well placed, and we are focussed on ensuring
that we reopen safely, and are geared up to make up as much lost
ground as possible in December.
"The last six months has demonstrated the increasing relevance
and appeal of our proposition, which gives us confidence in the
long-term future of the business."
Interim results notification
Our current intention is to announce the interim results for H1
FY21 and an update on Christmas trading on Friday 22 January 2021.
If, due to further disruption as a consequence of the current
pandemic, it becomes necessary to alter this date, we will issue a
notice accordingly.
Enquiries:
TheWorks.co.uk plc via Teneo
Gavin Peck, CEO
Steve Alldridge, Interim
CFO
Teneo
Ben Foster +44 7776 240806 |
Haya Herbert-Burns +44 7342 031051 | theworks@teneo.com
Rachel Miller +44 7850 656713 |
([1]) LFL sales are defined as the year-on-year growth in gross
sales from stores which have been opened for a full 63 weeks (but
excluding sales from stores closed for all or part of the relevant
period or prior year comparable period), and from the Company's
online store, calculated on a calendar week basis. LFL sales for H1
FY21 are stated for the 19 weeks ended 25 October 2020, being the
period during which the majority of the stores were trading
following reopening in line with the lifting of Government
restrictions.
([2]) Net cash is stated on a pre IFRS 16 basis and excluding
finance leases.
Notes to editors:
TheWorks.co.uk plc is a multi-channel value retailer of gifts,
arts, crafts, toys, books and stationery - offering customers a
differentiated proposition as a value alternative to full price
specialist retailers.
As at 25 October 2020, the Company operated a network of 530
stores in the UK and Ireland, on high streets, in retail parks,
shopping centres, factory outlets and as concessions in various
locations. The Works also has a significant and growing online
presence, with an extended range of products that enables customers
to shop any time of the day.
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