The Works losses widen to £7.8m amid ‘challenging’ market conditions
However, it still delivered total revenue growth of 3.1% to £122.6m and a total LFL sales growth of 1.6%
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The Works has fallen to a pre-tax loss of £7.8m in its half-year results, following a period of “persistently challenging” market conditions.
In the half-year ended 29 October, the retailer reported a pre-IFRS 16 adjusted EBITDA loss of £8.5m, widening from a loss of £6.4m the prior year.
However, it still delivered total revenue growth of 3.1% to £122.6m and a total LFL sales growth of 1.6% against a “challenging backdrop with softened consumer demand”.
While the group maintained store sales growth, with LFL sales up 3.5%, online sales fell by 12.2%, “echoing broader retail trends”.
Meanwhile, in the 11 weeks ended 14 January, LFL sales were “lower than anticipated”, falling by 4.9%, attributed to the “challenging” consumer environment and “subdued demand” over the festive period. The group noted that family finances were under pressure, “meaning many customers prioritised spend on food and essentials, whilst cutting back on gifting”.
Gavin Peck, CEO of The Works, said: “Market conditions have been persistently challenging, putting pressure on our sales and profit performance in the first half and throughout the festive period.
“It is clear that many families celebrated Christmas on tighter budgets this year, and whilst we offered excellent value, we were not immune to this reduced spend. I am proud of the way that our colleagues have rallied together to deliver for customers during these challenging times.”
He added: “We have started the new calendar year on an improved sales trajectory, with a strengthened leadership team to drive forward our strategy and exciting Easter and summer toy ranges due to land later this year. However, we are also mindful of external challenges, including recent supply chain disruption in the Red Sea.
“Our focus for the remainder of the year will be on cost reduction, rebuilding margin and profitability, and conserving cash. It is necessary to take this action now to stabilise the profitability of the business during this challenging period, however we remain confident that our “Better, not just Bigger” strategy is the right direction for the business and will enable a return to sustainable growth in the long term.”
