Retail chain The Works saw a 19% decline in total sales year on year for the 53 weeks to 2nd May 2021 despite online revenues rocketing 121%, the firm announced in a trading update.
The company, which sells books, arts, crafts, toys and stationery, said it had delivered a “resilient” performance despite lockdown restrictions, with falling sales partially offset by online growth and strong demand when stores were open. Total sales were down from £254.6m the previous year to £206.2m. The period saw 16 weeks when all its stores were closed and another eight when at least 75% were shut.
“Throughout the year our online performance was supported by the investment we made to increase online capacity and our new customer website,” the company said. It added that a revised strategy had seen it optimising its existing store estate rather than pursuing new openings. It finished the period with 527 UK stores, five fewer than the previous year.
The Works said it had used tight cost control and government support schemes to end the period in a “strong” financial position, generating cash of around £7.5m and ending with a net cash balance of around £0.5m, compared to a net bank debt of £7.1m the previous year.
Looking ahead, the company said sales since its stores reopened had been “very encouraging” and it was confident in the business's future prospects, although it would not be issuing profit guidance. The trading update noted: “It is probably too soon to judge the extent to which these encouraging sales reflect strong underlying performance as opposed to pent-up demand. As expected, with the reopening of the stores, online sales have reduced but remain significantly ahead of pre Covid-19 levels.”
C.e.o. Gavin Peck said: “Like many retailers, the past 12 months have been incredibly challenging for The Works, which has historically relied mainly on in-store sales. Our business was severely impacted by successive lockdowns and forced closures of our entire store estate.
“Despite this, the period has highlighted the resilience of the business and our ability to both adapt our offer and leverage our multi-channel model. Since we couldn’t control store closures we focused on the things we could manage, keeping tight control of costs, optimising our operations and vastly improving our online offering. As a result, our financial position remained strong, online growth exceeded our expectations, and when stores reopened we saw customer demand returning quickly to pre-Covid levels.
“I am incredibly proud of our colleagues who have supported each other so brilliantly and the unique culture at The Works that has enabled us to withstand this difficult year and emerge quickly and optimistically as a stronger business. Although uncertainty remains, particularly around the shape of the consumer recovery, the board expects the early progress to continue and remains confident in the future prospects of the business.”
Steve Alldridge, who joined in June 202 as interim chief financial officer, has now been formally appointed to the board as chief financial officer, the company announced.
Full-year results for the period are slated to be announced on 20th July, alongside a further trading update.