The Works shares surged on Friday after it announced it had shut down its online shop with immediate effect, declaring the loss-making channel “no longer sustainable” after years of problems with third-party fulfilment partners.
Shares were 19% higher at the time of writing.
The value retailer, which sells books, arts and crafts supplies, stationery and toys across more than 500 UK stores, said its website would become a non-transactional “shop window”, letting customers browse the range but directing them into stores to buy.
Online never accounted for much of the business, contributing less than 10% of group sales.
But operational failures at two separate fulfilment partners over the past two financial years had made it a thorn in the side of an otherwise thriving business, wiping out the progress the company had been making on the channel’s functionality and profitability.
The board said it had assessed a wide range of options before concluding the best course was to walk away entirely. Exceptional closure costs of around £2 million will be recognised in the current financial year, with the online operation treated as a discontinued business in the accounts.
The group will now refocus on its physical stores, where like-for-like sales are up 3.3 per cent year to date.
The company plans to open a net five new shops this year and ten more in FY27, with scope for a further 100 locations beyond that.
Full-year guidance for FY26 is unchanged at an adjusted EBITDA of £11.0 million on a total basis, and is restated to £13.5 million for continuing operations once online losses are stripped out.
FY27 guidance has been upgraded from £12.7 million to £15.0 million, reflecting both the improving core business and the removal of the drag from e-commerce.
The Works said it remains on track for its medium-term target of at least £22.5 million in EBITDA by FY30, and now expects to reach it with lower sales than the original £375 million goal.
“We have reached this decision after a thorough assessment of the options available and are confident that focussing on our successful bricks-and-mortar business is the right step to reduce risk, improve operational clarity and support long-term profitable growth. A website that enables customers to browse our products and seek inspiration will help to bring our brand to life and drive customers to our 500 stores,” said Gavin Peck, Chief Executive Officer of The Works.
“Our mission – to become the favourite destination for affordable, screen-free activities for the whole family – has never been more relevant and this, combined with ongoing delivery of our ‘Elevating The Works’ strategy, means we are well-positioned to achieve significant and profitable growth in the years to come.”