Profit growth supports retailer’s aggressive store expansion strategy

Books, toys and stationery retailer The Works has shrugged off the wider malaise on the High Street to deliver a big jump in profits in its maiden results as a public company.

The Sutton Coldfield-based business generated pre-tax profits of £6.7m, up nearly 60%, before one-off adjustments which mostly related to costs and staff incentives from its £100m float in 2018.

The retailer said its store roll-out strategy is its biggest driver of growth as it launched 50 sites in the year. It opened its 500th store weeks after the financial year-end and plans to continue its rapid expansion.

Revenues were up £25m to £217.5m in the 52 weeks to April 28th. Like-for-like sales were up 3%, driven by growth both in stores and online as The Works also leveraged opportunities for additional sales in-store due to growth of Click & Collect sales channel.

Kevin Keaney, right, received the 2019 Ambassador award from TheBusinessDesk.com’s joint managing director Alex Turner

Kevin Keaney, chief executive of The Works, who won the 2019 Ambassador at TheBusinessDesk.com’s West Midlands Business Masters , said: “In our first year as a listed business, I am pleased that TheWorks has achieved good growth, underpinned by our clear strategy and a consistent focus on our customers.

“Opening new stores remains our biggest driver of growth and we have taken advantage of the favourable property market by opening a net 50 new stores in the year.

“We delivered good like-for-like sales across all channels, as our continued focus on product newness and our nimble buying strategy enabled us to anticipate customer demand for current trends and seasonal ranges.”

Keaney said underlying like-for-like sales in the first nine weeks of the current year have edged up slightly while the company contiuned to open stores at a rate of one per week.

“This was achieved against a consumer backdrop that remains subdued and we are now assuming that this will continue for the foreseeable future,” he said.

Keaney said that although the market is “challenging” it “also creates opportunities”.

“The structural shift in the retail sector has resulted in a constant flow of more affordable, good quality retail space. We have a full pipeline of new sites and recent openings have continued to perform well.

“We also have exciting plans for Christmas, the key period in leveraging our differentiated customer proposition, by offering a wide range of new products at outstanding value. This, combined with our other growth levers, makes us confident of making further progress in the current year.”

The company is recommending a maiden final dividend of 2.4p, taking the full-year dividend to 3.6p.