The Works: Arts and crafts retailer slashes losses as new strategy unveiled
High street arts and crafts retailer The Works reported a significant improvement in profitability for the first half of its financial year, as it unveiled a new strategy.
Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) showed a market improvement, with losses narrowing from £8.5m to £2.8m since the same period last year.
Adjusted pre-tax losses also also improved in this period, falling from £10.4m to £6.5m.
Revenue for the 26 weeks ending 3 November 2024 increased 1.3 per cent to £124.2m, in line with expectations and ahead of the wider non food retail sector, the company reported.
Store sales at The Works, which account for over 90 per cent of the company’s total revenue, grew by 0.9 per cent on a like for like basis, driven by strong demand for seasonal ranges and fictional books.
Yet, online sales reportedly fell 14.7 per cent due to reduced promotional activity and operational issues at its third party fulfilment centre.
The Works credited its tangible results to cost saving measures and actions to grow product margins, which offset its ongoing cost pressures.
It also announced a new five year strategy aimed at transforming the business, targeting revenue of £375m.
Following a review of long term goals, this strategy is designed to position the company as the go-to destination for affordable, family-friendly activities that are screen-free.
Chief executive Gavin Peck said: “The groundwork for our new strategy is now in place, which will help deliver improved performance and shareholder returns in the year ahead”.
Product margins increased by 220 basis points year on year, while efficiencies in its retail distribution centre also contributed to further savings.
Trading for the 11 weeks to 19 January 2024 was “in line with expectations”, with store sales up one per cent on a like for like basis.
Yet, online sales at The Works continued to decline, decreasing 14.9 per cent due to the fulfilment challenges during the peak Christmas trading period.
Peck said: “Against a persistently challenging consumer backdrop, we delivered a much improved christmas perfromance in stores and took decisive action to protects profitability during peak trading”.
“While consumer confidence remains fragile, we are optimistic about our ability to navigate ongoing cost headwinds through continued cost-saving actions and targeted price increases”.
The company reported that it remains on track to achieve market expectations for its 2025 financial year, anticipating even further profit growth in its financial year 2026.
“Although challenges remain, we are confident in our ability to deliver long term growth and success”.