Retailer maintains expansion strategy despite softening profits
Retailer The Works is pushing ahead with its expansion strategy but warned that profits would be lower than expected as a result of “softening” sales growth since the turn of the year which it blamed on economic and political uncertainty.
However, the Sutton Coldfield-based books, toys and stationery retailer saw revenue increase by 13.2% year-on-year, with overall like-for-like sales growth of 3% for the 52-weeks to the end of April, which it said was driven by growth both in stores and online, with a “particularly pleasing” performance from its Click & Collect service.
The Works continued its store rollout strategy, opening 50 new stores, taking the total number of stores trading to 497.
Returns on new stores were particularly strong, which The Works said reflects continued discipline on site selection, supported by an increasingly favourable UK retail property market.
The company says it has a strong pipeline of openings moving into the new financial year and will open its 500th store tomorrow in Winchester.
“Management remain confident of the potential to expand the store portfolio to up to 1,000 stores in the UK and Ireland,” the company said.
“The Works delivered its eighth, consecutive, record Christmas performance in the period but, as a result of the widely reported economic and political uncertainty in the UK, like-for-like sales growth has softened since the turn of the year.
“Consequently, the company now expects its adjusted profit before taxation to be around the lower end of current market expectations.”
Kevin Keaney, chief executive of The Works, who was named 2019 Ambassador at the West Midlands Business Masters Awards in March, said: “Overall, we have had a successful year as we continued to expand our store footprint and online proposition and introduce new customers to The Works.
“We achieved another record Christmas, solid like-for-like sales growth and further cash margin improvement in the year. Our differentiated proposition, offering a wide range of new products at outstanding value and delivered by our highly engaged colleagues, continues to be well received by our customers.
“Notwithstanding the more uncertain backdrop since January, the business has multiple growth levers and we remain confident in the future prospects for The Works.”
