The Works has posted flat sales and declining profits for its last financial year after navigating a “challenging consumer backdrop” but said it is “well positioned” for its Christmas peak.
The value retailer’s adjusted EBITDA fell from £9m to £6m in the year ending 5 May, with profitability hit by tough Christmas trading last year and higher costs.
However, strategic moves to improve product margins, cut costs, and stabilise the business have positioned the retailer to improve profitability in FY25, with forecasts of adjusted EBITDA of £8.5m as it heads into the key Christmas period.
Over the year, sales edge up by 0.9% to £282.6m, despite like-for-likes falling 0.9%. Store sales, which make up 90% of total revenue, inched up 0.6%, while online dropped 12.4%.
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The Works CEO Gavin Peck said: “Against a persistently challenging consumer backdrop and tough Christmas trading, we were pleased to end FY24 in line with market expectations.
“Good strategic progress was made during the year and whilst we believe this continues to be the right high level strategic direction for The Works, we also believe that now is the right time to evolve the strategy. Work is therefore underway to refine our plans to transform the business and drive an improved performance and shareholder returns in the years ahead.
“Although consumer confidence remains subdued and we continue to face tough cost headwinds, the cost and operational action we have taken and the trajectory of recent trading means we are well positioned to offset these and return to profit growth in FY25.
“Operationally we are in a much stronger position this year as we head into the upcoming peak Christmas trading period and we look forward to supporting customers to have a Christmas well spent courtesy of The Works.”
Two representatives from The Works’ shareholder Kelso Group have stood down from the retailer’s board. Kelso CEO John Goold and CFO Mark Kirkland had joined the board on a temporary basis to “provide additional guidance as the business underwent a period of change”.
“Since then, significant progress has been made, namely transferring from the Main Market to AIM and strengthening the leadership team. We are content to step down now, knowing that the company is on a path to growth and with full confidence in the management team,” the pair said.
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