TheWorks.co.uk PLC on Thursday said sales grew in the first half of its financial 2024, despite pointing to a challenging market environment, while it expects consumers to leave their Christmas shopping until ‘very late’ in the season‘.
Shares in the TheWorks.co.uk were down 24% to 30.40 pence each in London on Thursday afternoon.
In the 26 weeks that ended October 29, the Birmingham, England-based retailer of arts and crafts, stationery, toys and books said totals grew 3.4% from a year earlier, with total like-for-like sales up 1.6%. Store like-for-like-sales were up 3.5%, while online sales fell 12%.
‘The first half of the year has been challenging for the retail sector as cost-of-living pressures continued to weigh on households,’ said Chief Executive Officer Gavin Peck.
‘Consumer sentiment softened towards the end of the period, which resulted in early discounting across the sector and increased uncertainty as we head into the Christmas period. Recognising the competitiveness of the market we have responded with more promotional activity, which we expect to continue as we approach Christmas. Families will want to celebrate Christmas affordably and our value proposition makes us an ideal choice for them.’
Looking ahead, TheWorks.co.uk said trading in the six weeks before Christmas will have its typical ‘significant bearing on the overall result’ for the financial year.
But it noted that it expects sales to follow a similar pattern to last year, when consumers left Christmas shopping until ‘very late in the season’. As a result, it conceded that any forecast prepared at this stage would include a ‘high degree of uncertainty’.
‘We anticipate that trading conditions during [the second half] will remain challenging and consumer spend will be subdued, resulting in the continuation of the increased levels of discounting recently seen across the sector,’ the company said.
‘To ensure that we offer the best value to our customers, we expect to maintain a higher level of promotional activity than envisaged at the outset of the year. We will also continue to take action to reduce costs.’
As a result, TheWorks.co.uk said it revised its full-year guidance for pre-IFRS adjusted earnings before interest, tax, depreciation and amortisation of around £6.0 million, falling from £9.0 million a year earlier.
‘Market conditions remain challenging and given the level of uncertainty in trading and forecasting we believe it is now prudent to moderate our expectations for FY24. Despite this short-term volatility, we believe that our ’better, not just bigger’ strategy has the potential to deliver profitable growth in the medium and long-term,’ added CEO Peck.
TheWorks.co.uk also confirmed Rosie Fordham will become chief financial officer at the end of the year. It was previously announced at the end of August that she would succeed Steve Alldridge by the end of the year, following a handover process.
TheWorks.co.uk will publish its interim results and an update on Christmas trading on January 18.
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