Retailer sees positive news in The Works despite £23m hit from Covid-19

TheWorks has delivered a “creditable performance” after a tough year that had seen the retail group start to cut costs before coronavirus.

However the impact of Covid-19 on trading was estimated at £3m while its newly-published accounts include non-cash impairment charges of £19.5m caused by the consequences of coronavirus, which relate to goodwill and store assets.

The Sutton Coldfield-headquartered business has also reported sales “well ahead” of its forecasts since re-opening, with like-for-like sales slightly ahead of last year in the last 10 weeks.

Gavin Peck, The Works

Gavin Peck, who stepped up from commercial director to chief executive in January, said: “Our performance this year demonstrates the resilience of our business and we are pleased to have delivered a creditable performance despite the challenging backdrop.”

Revenues were up 3% to £225m for the year to April although pre-tax profits before the impairment charges fell by 65% to £2.4m.

The company remains cautious and is not paying a final dividend for the year and declined to provide guidance for the year ahead.

Peck had already “refocused” the retailer’s strategy in January, reducing the number of store openings and instead concentrating on improving performance in its existing shops.

At the time he said the move was “to ensure we are well placed to deliver profitable growth in the medium-term”.

Today Peck was positive about the impact the changes had made in its 534 stores.

He said: “Christmas was a turning point and this positive momentum continued in the following months supported by new products and merchandising initiatives launched during the year driving like-for-like sales growth. The improved trading performance was supported by the increased focus on cost management.”

The retailer is also looking for Christmas cheer again this year and said it has continued “to focus on improving our online capacity and customer experience in stores” as it builds into the peak Christmas period.

Although the group hasn’t provided specific guidance about future trading, Peck sought to be upbeat about the direction of travel.

He said: “Our performance during the COVID-19 pandemic shows our customer proposition is more relevant than ever and, despite the significant uncertainty that remains, the Board continues to believe that we have many exciting opportunities ahead of us that will enable us to deliver value for all of our stakeholders in the long-term.”

TheWorks had gone public in July 2018, which valued the business at £100m, but this has slumped to just £15m.

Most of the damage to shareholder value was done before the pandemic arrived, with last night’s closing share price of 24p not significantly below the 28p level seen at the start of 2020.