Christmas shopping season fears revealed by The Works
Books, toys and stationery retailer The Works has revealed its fears for the Christmas shopping season as rising costs continue for the consumer.
The Sutton Coldfield-based business said the general market outlook has deteriorated, alongside low consumer confidence and rising inflation.
This has created a degree of uncertainty for The Works as to how consumers will behave during Christmas – its most important trading period.
Despite concerns, the firm says it expects to grow sales in the remainder of FY23, but it’s uncertain as to whether the level of growth will be able to offset cost headwinds such as freight costs.
The Works says therefore it would like to maintain a “cautious approach” in these market conditions and has materially lowered in expectations in relation to FY23’s result.
In its trading update issued in May, the firm said its FY22 EBITDA result was expected to be £15.0m.
Underlying EBITDA is now expected to be approximately £16.5m, primarily due to a lower than expected level of provisions relating to stock.
The retailer was subject to a cyber security incident at the end of March 2022. Although the immediate impact on trading was limited, the action taken to secure the business had a residual impact on store and online trading.
Gavin Peck, the CEO of The Works said: “Since the start of the financial year we have faced the residual effects of the cyber security incident and increasingly challenging trading conditions.
“Our recent online sales performance reflects the challenges facing the broader sector but remains significantly higher than pre-COVID levels and we remain confident that the long term investment we have made in our customer proposition will see further growth.
“The Works is a remarkably resilient business and the Group’s financial position remains robust. Although the near term market conditions are very uncertain, we are confident that our ‘better, not just bigger’ strategy still has a lot more upside to deliver in the medium term”.