Value retailer reveals strong in-store performance beats online decline
Value stationery and gifts retailer The Works has seen a strengthening in trade since the end of the first half of its financial year, with sales increasing by 5.7% over the 11 weeks to 15 January.
The business, which positions itself against greetings and stationery retailers including WHSmith, Paperchase, Rymans, Waterstones and Smiggle, released its latest trading update on Friday, 20 January, revealing a particularly strong performance in-store where sales rose by 9.7%, although online sales declined by 14%.
CEO Gavin Peck said: “We have not been immune from the economic headwinds affecting the retail sector, including higher costs which impacted our profitability in the first half more than last year. Although trading conditions were more difficult, we were still pleased to see cost-conscious customers buying into our value offering, which enabled us to deliver positive sales growth overall.”
With the tagline “the family-friendly value retailer of books, arts and crafts, stationery, toys and games”, the offer includes greeting cards, diaries, calendars and notebooks, and The Works said store sales were particularly strong in the week immediately prior to Christmas 2022, suggesting consumers had shopped much later than in 2021.
It admitted online sales had softened in the run-up to the festive period, “which we believe was due to consumers losing confidence in retailers’ delivery promises in light of the widely reported postal strikes, and the potential for knock-on effects on other carriers”.
And the retailer said store sales since Christmas have “continued to be strong” going into its January sale, and it expects to end the financial year with a “clean stock position”, albeit with the anticipated higher level of markdown than last year, when stock levels were unusually low.
Post-sale, The Works will continue to improve its product proposition with strong new seasonal and own brand range launches, which it expects to drive stronger trading compared with last year.
Giving an update on the results of its first half trading in the six months to 30 October, the company said total revenue grew by 2.4% compared with the previous year, with store sales increasing by 3.5% and online sales declining by 16.9%.
Having posted a pre-tax loss of £10.7million in the half year compared to a loss of £1m in the same period 12 months prior, the report stated: “Due to the seasonal nature of the business, The Works typically makes a loss in H1, with the year’s profit generation being strongly focused on the peak Christmas trading period in H2.
The company said it had capitalised on key seasonal events, with refreshed outdoor play ranges popular in the summer, and a record Back To School season driven by improved third party and own-brand stationery ranges.
Seven new stores were opened, with two relocated “all of which are trading ahead of expectations”, and of the 525-outlet estate across the UK and Ireland, 21 shops were refitted.
Looking ahead, Gavin commented said: “While the trading environment remains uncertain, we are encouraged by the strength of our performance during and after the key Christmas period and believe there is significant value to be created from delivering on our strategy in the medium-term. This is what we will be focusing on during the upcoming period, and we feel well placed to capitalise on the many attractive opportunities that lie ahead.”
Top: Family-friendly is The Works’ tagline