Shares in cut-price books, arts and crafts and toys retailer The Works (WRKS) cheapened 6% to 31.5p on Friday as the company’s half year and Christmas update confirmed the negative impact of Covid-19 restrictions on the business.

Limiting the share price damage was the news strong online sales helped to mitigate the closure of stores over the Christmas period and the fact The Works’ finances appear robust enough to weather the remainder of the pandemic.


During a lockdown-disrupted, loss-making half to 25 October 2020, like-for-like sales were broadly flat for the seller of board games, jigsaws and books.

Encouragingly, like-for-like sales actually increased by 10.6% over the 19 weeks to 25 October when stores were open, significantly ahead of management’s expectations, while online sales doubled as consumers sought to beat lockdown boredom.


Over the crucial 11 weeks to 10 January 2021, the latest lockdown and Covid-19 restrictions continued to dent The Works’ performance with total sales down the best part of 25% year-on-year, though online grew by 70% to help offset some of the lost store sales.

‘Our interim results and trading over the crucial Christmas period reflect a robust performance given the impact of store closures as a result of Government restrictions,’ insisted chief executive Gavin Peck.

‘When open, our stores have performed well and our online proposition has continued to resonate strongly, supported by the investment we made to increase online capacity.’

With The Works’ stores temporarily closed, Peck is once again ‘focussed on maximising sales through our online operations and carefully controlling costs whilst ensuring that we are able to reopen safely when restrictions allow.’

Peck also stressed his charge is in ‘a strong financial position to face the current challenges’; net debt for the full year is expected to be no higher than the £7 million level back in April 2020 and banking facilities of around £30 million give the hard-pressed retailer some breathing space.


Shore Capital believes The Works ‘continues to navigate the Covid fog and store closures’ and likes ‘the self-help levers in the business’ including a flexible store portfolio with an average lease length of just two years.

‘Having been forced to think like a pure-play given the lockdowns and forced closure of the store estate has enabled the business to increase online capacity significantly and re-platforming of the website during the summer, which will help mitigate some of the cost pressures in the business,’ said Shore Capital.

‘Whilst the outlook remains uncertain the company has adequate headroom and tight stock and cash controls. The business remains well managed in volatile trading conditions.’


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Issue Date: 22 Jan 2021