High Street

The Works warns of trading slowdown despite ‘strong’ FY22

Despite headwinds, it revealed ‘operational and propositional improvements’ have helped to offset the impact of the external headwinds noted above, meaning that it has retained its FY22 EBITDA forecast of £15m

Arts and crafts and book retailer The Works has warned it has experienced a slight slowdown in recent trading due to the cost of living crisis, despite reporting a “strong” FY22 performance.

In a trading update for the 52 weeks ended 1 May 2022, the retailer revealed it was trading “well above” pre-pandemic levels up 10% on a LFL-basis compared on a two-year basis and total two-year sales growth of 12.7%.

Following the strong first half and record Christmas trading performance, it added its 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.

It added that consumer spending is “widely reported to have slowed in recent months”, adding it believes this has had an impact on sales. During the period it also confirmed it experienced “limited disruption” to trading and business operations as a result of a cyber security incident at the end of March.

Despite these headwinds, it revealed “operational and propositional improvements” have helped to offset the impact of the external headwinds noted above, meaning that it has retained its FY22 EBITDA forecast of £15.0m

As such, the company has reinstated its dividend and 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.

CEO Gavin Peck said: “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.”

He added: “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.”

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