First-half losses widen at The Works, shares plunge

The London-listed firm said revenues in the 26 weeks to 30 October grew by 2.4% to £118.9m, but adjusted losses were £6.4m, compared to earnings before interest, tax, depreciation and amortisation of £2.5m a year previously.

The pre-tax loss was £10.7m, compared to £1.0m a year earlier.

The losses were expected, following a cyber security incident in March and higher costs, primarily around freight and inflation. Due to the seasonal nature of the business, The Works traditionally makes a loss in the first half, as Christmas - a key trading period - falls in the second part of the financial year.

The retailer, which left its full-year guidance unchanged, said total like-for-like sales jumped 5.7% in the 11 weeks to 15 January. In-store sales rose 9.7% but online sales fell 14.0%, slightly more than expected, as consumers returned to in-person shopping.

By 0930 GMT shares in The Works had lost 20% at 34.75p.

The Works - which sells books, arts and crafts, stationery and toys - said it was "encouraged" by the in-store festive performance. "Store sales were particularly strong in the week immediately prior to Christmas," it noted, "suggesting that consumers shopped much later than in 2021 and that many were seeking value when shopping gifts."

Gavin Peck, chief executive, said: "The Works delivered a resilient performance in the first half against the backdrop of an increasingly challenging consumer environment.

"While the trading environment remains uncertain, we are encouraged by the strength of our performance during and after the key Christmas period, and believe there is significant value to be created from delivering on our strategy in the medium-term."

Peel Hunt, which has a ‘buy’ recommendation on the stock, said: "The first half loss was in line with our thoughts.

"The Works is making decent progress with its proposition and it is a company that we like. The shares continue to be low valued and this is overly harsh in our view."