Value retailer hits £10.2m profit with ex-Card Factory boss at the helm
The Works has delivered a “strong financial performance” in its latest trading update, with former Card Factory commercial director Gavin Peck at the helm.
In the preliminary results for the year to 1 May 2022, the value retailer – which cites stationery, including cards, as one of its four key zones, alongside toys and games, arts and crafts, and books – said it has “made good strategic progress” and remains confident despite the more challenging conditions expected as the cost-of-living crisis continues.
The Works’ report said all retailers had faced “difficult external conditions over the past year,” noting increased costs and disruption caused by the global supply chain challenges post-Covid, plus the company had been hit by a cyber security attack at the start of the year but it said despite the “adverse impacts from these events”, the business was able to deliver a strong trading performance in FY22, well ahead of pre-pandemic levels.
With a full range of stationery, diaries, calendars, advent calendars, Christmas decorations, novelty gifts and party supplies, plus wrapping paper and some seasonal greeting cards, revenues rose to £264.6million, up from £180.7m, while profit before tax increased to £10.2m, compared to a loss before tax of £2.8m in the previous year, and it had delivered another record Christmas, demonstrating “its resilience in very challenging circumstances”, while positive growth in-store and online saw two-year like-for-like sales rise 10.5%, while two-year total gross sales were up 12.7%.
Chief executive Gavin, who joined the company in 2018 after playing a sizeable role in Card Factory’s successful 2014 IPO and subsequent growth from 530 stores to over 900, said: “We delivered a strong performance in FY22, with good growth in sales and profits ahead of pre-Covid levels.
“This was achieved despite some significant external operational challenges and reflects the ongoing appeal of our proposition, the effective execution of our strategy, a strengthened management team and the collective efforts of our amazing colleagues. We closed the year in a much stronger financial position and will be pleased to recommend to shareholders the payment of a dividend.”
Since The Works’ last update on 8 August, 2022, Gavin said the online performance has gradually improved and he continues to be encouraged by store sales which comprise the significant majority of revenue, and have delivered positive LFL sales growth since June, all supported by the “ongoing evolution of our proposition”, he said.
Despite the positive recent trading, the company said it will remain cautious with regard to how consumer spending might be affected by factors including higher inflation during the rest of this financial year, and therefore the board’s expectations regarding the FY23 result are unchanged.
Gavin added: “The Works is a resilient business with a proven track record of delivering robust results during times of economic hardship, however, given current conditions, we maintain our cautious view of the year ahead. We remain confident in our ability to continue making good strategic progress and to deliver growth in the medium-term.”