TheWorks.co.uk PLC on Friday bemoaned macroeconomic headwinds, after seeing its pretax loss widen on rising costs over the first half.

TheWorks is a Birmingham, England-based retailer of books, arts and crafts, stationery, toys and games.

Company shares fell by 21% to 34.11 pence each in London on Friday morning. The stock is down 40% over the past year.

For the six months that ended October 30 last year, the company reported a pretax loss of £10.7 million, substantially widened from £1.0 million a year prior.

This was despite an increase in revenue, which rose 2.4% to £118.9 million from £116.1 million the previous year.

Capital expenditure over the period was £2.5 million, up from £1.6 million.

TheWorks said that its first-half performance was affected by the residual impact of a cyber security incident in March 2022, alongside cost headwinds including freight, inflation, and the normalisation of business rates charges, which represented around £3.9 million of additional cost.

It added that, due to the seasonality of the business, the first half of the financial year is typically loss-making.

More positively, TheWorks reported growth of 5.7% in like-for-like sales over the 11 weeks to January 15. Stores sales grew by 9.7%, while online sales declined by 14%.

‘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,’ said Chief Executive Officer Gavin Peck.

‘Whilst 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 focussing on during the upcoming period, and we feel well placed to capitalise on the many attractive opportunities that lie ahead.’

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