Retailer issues profit warning as it gears up to Christmas
A profit warning has been issued by books and stationery retailer TheWorks due to growing uncertainty for its Christmas trading period.
The Sutton Coldfield firm said in a trading update that sales in the six weeks between now and Christmas will have a significant bearing on the overall result for the financial year. Especially as last year, consumers left Christmas shopping until very late in the season.
Reduced consumer demand combined with poor weather conditions has caused footfall to drop over the last nine weeks. This has added further pressure amidst a challenging macroeconomic climate.
TheWorks says that it’s necessary to have a higher-than-planned level of discounting to remain competitive and has therefore revised its likely full-year result and expects its adjusted EBITDA to come in at £6m.
Its CEO Gavin Peck called the move “prudent” but still expects the retailer will deliver profitable growth in the medium and long term.
He said: “The first half of the year has been challenging for the retail sector as cost-of-living pressures continued to weigh on households. We have focused on delivering excellent value for our customers, adapting as best we can to the tough trading conditions, and I am proud of the way our colleagues have rallied together and responded.
“Consumer sentiment softened towards the end of the period, which resulted in early discounting across the sector and increased uncertainty as we head into the Christmas period. Recognising the competitiveness of the market we have responded with more promotional activity, which we expect to continue as we approach Christmas. Families will want to celebrate Christmas affordably and our value proposition makes us an ideal choice for them.
“Market conditions remain challenging and given the level of uncertainty in trading and forecasting we believe it is now prudent to moderate our expectations for FY24. Despite this short-term volatility, we believe that our ‘better, not just bigger’ strategy has the potential to deliver profitable growth in the medium and long-term.”
