Retailer optimistic despite drop in profit

Books-and-stationery retailer The Works has reported a reduced EBITDA, which it hopes to “build from in the years ahead”.

The Sutton Coldfield-based firm reported a £5m profit before tax in its delayed preliminary year results to April 30, 2023, but suffered from impairment charges of £5.1m, most of which it says relate to the notional right of use asset created as a result of following the requirements of the IFRS 16 accounting standard.

It had revealed a restated profit before tax of £14.2m in its results from the previous year.

Despite this as well as inflationary pressures, The Works believes it is well-positioned to capitalise on growth opportunities after it saw a 5% increase in revenue to £280.1m and an overall LFL sales growth of 4.2%.

After being subject to a cyber security incident involving unauthorised access to its computer systems in March 2022, the retailer has seen 14 store openings and 13 closures and invested £1.4m to retrofit 34 stores.

Today, it was announced that Steve Alldridge will step down from his role as CFO by the end of 2023, and Rosie Fordham, current head of finance, will be appointed as CFO when he steps down.

Gavin Peck, CEO of The Works, commented: “The Works delivered a resilient performance in FY23, despite facing some sizeable challenges. Revenue growth was driven by our strong portfolio of stores, bolstered by the sector-wide shift of customers returning to shop in-store post-COVID. Although inflationary pressures increased business costs and dampened consumer confidence, we ended the year in line with our rebased expectations. FY23 also showcased the enduring appeal of our value proposition. I’d like to thank our colleagues who have demonstrated their ongoing dedication to The Works and have continued to show customers how they can read, learn, create and play more on a budget.

“In the first half our focus was on protecting and rebuilding the business, but as the year progressed we were able to make more strategic progress. We have developed our brand and customer proposition, ensured that our ranging is aligned with customer demand and improved our store estate. We’ve also taken steps to enhance our online proposition and drive significant operational improvements across the business, the benefits of which we expect to be fully realised from FY24 onwards.

“Looking ahead, the macroeconomic environment remains uncertain. However, we are now well positioned to capitalise on strategic opportunities and given the momentum gained in the latter half of FY23 we expect to grow sales and profit in FY24. Reflecting confidence in the Group’s prospects, the Board proposes a final dividend of 1.6 pence per share in respect of FY23.”