High street arts and crafts retailer, The Works, has reported a significant improvement in profitability for the first half of its financial year, unveiling a new strategy in the process.
Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) showed a marked improvement, with losses narrowing from £8.5m to £2.8m since the same period last year, as reported by .
Adjusted pre-tax losses at the Birmingham business also improved during 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, according to the company's report.
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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. However, online sales reportedly fell 14.7 per cent due to reduced promotional activity and operational issues at its third-party fulfilment centre.
The Works attributed 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.
Gavin Peck, Chief Executive of The Works, stated that the groundwork for their new strategy has been laid down to deliver enhanced performance and shareholder returns in the coming year. "The groundwork for our new strategy is now in place, which will help deliver improved performance and shareholder returns in the year ahead."
The company witnessed a 220 basis point increase in product margins compared to the previous year, alongside savings from efficiencies in its retail distribution centre. Trading in the 11 weeks leading up to 19 January 2024 was reported as being "in line with expectations", with store sales having risen by one percent on a like-for-like basis.
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However, The Works saw a continued decline in online sales, falling by 14.9 percent, affected by fulfilment issues during the critical Christmas period. Peck commented on the season's outcome: "Against a persistently challenging consumer backdrop, we delivered a much improved Christmas performance in stores and took decisive action to protects profitability during peak trading."
Peck remained optimistic despite weaker consumer confidence, citing ongoing cost-saving measures and targeted price increases to mitigate costs. The company remains on course to meet market expectations for the financial year 2025, with prospects of increased profit growth into the financial year 2026.
Peck concluded with confidence in the long-term growth and success of the business: "Although challenges remain, we are confident in our ability to deliver long term growth and success."