The Works blames ‘tighter’ family budgets for slump in online sales
The books, arts and crafts retailer said it faced ‘tough headwinds’.
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Your support makes all the difference.Retailer The Works has blamed “tighter” family budgets, inflation and the increase in the national living wage after it announced a slump in online sales and heavier losses.
The family-friendly retailer saw shares slide after it said it faced “tough headwinds” as online sales dropped by 12.2% in the half-year to October 29, compared with the same period a year earlier.
It said losses therefore doubled to £14.8 million from £7.3 million a year earlier.
The arts, crafts and stationery company is taking “decisive action” on cost reduction and margin growth in order to turn around its performance.
Market conditions have been persistently challenging, putting pressure on our sales and profit performance in the first half and throughout the festive period
Gavin Peck, chief executive of The Works, said: “Market conditions have been persistently challenging, putting pressure on our sales and profit performance in the first half and throughout the festive period.
“It is clear that many families celebrated Christmas on tighter budgets this year and whilst we offered excellent value, we were not immune to this reduced spend.
“I am proud of the way that our colleagues have rallied together to deliver for customers during these challenging times.”
The UK-based company, with 525 stores, also reported a “lower than anticipated” 4.9% decline in like-for-like sales over the 11 weeks ending on January 14.
It blamed the disappointing result on a “challenging consumer environment and subdued demand over the festive period”.
Mr Peck is also “mindful” of supply chain disruptions caused by Houthi rebel attacks on cargo ships in the Red Sea.
He said: “We have started the new calendar year on an improved sales trajectory, with a strengthened leadership team to drive forward our strategy and exciting Easter and summer toy ranges due to land later this year.
“However, we are also mindful of external challenges, including recent supply chain disruption in the Red Sea.”
As of January 14, the company reported a cash position of £16.4 million, which had improved after Christmas.
“Our focus for the remainder of the year will be on cost reduction, rebuilding margin and profitability and conserving cash,” Mr Peck said.
“It is necessary to take this action now to stabilise the profitability of the business during this challenging period, however, we remain confident that our “better, not just bigger” strategy is the right direction for the business and will enable a return to sustainable growth in the long term.”