The Works (LON:WRKS) have seen their shares spike on Thursday as the firm reported record trading over the festive period.
The stationary, books, toys and arts and crafts retailer said to shareholders that like for like sales in the 11 weeks period rose by 1.5%, notably this showed an impressive period of trading across Christmas as the period ended on January 12.
The company has been forced to increase discounting to boost sales, as the retailer has seen slowing sales post Christmas.
For its first-half, the six months to October 27, revenue climbed by 5.4% year-on-year to £96.4 million from £91.5 million. On a like-for-like basis however, sales were 3.6% lower during the period.
Its pretax loss narrowed to £8.5 million from £9.1 million last year which has been reflected in todays share price surge.
The Works held its interim dividend at 1.2 pence per share.
The Works also noted that 33 new stores were opened and five were closed, bringing the total estate to 525 stores as at 27 October 2019. Two stores were relocated during the Period and a further net 13 stores were added following the period end.
Gavin Peck, Chief Executive Officer of The Works, commented:
“I am pleased to report that the Company delivered a solid performance during the key Christmas trading period with like-for-like sales up 1.5%. This was driven by growth in both stores and online. However, to ensure we are well placed to deliver profitable growth in the medium-term we have taken action to refocus our strategy by opening fewer new stores, with a view to driving improved performance in our existing estate and increasing our focus on cost savings. We remain confident in the prospects for the Company with the business trading-in line with the Boards’ full-year expectations.
“I am delighted to be taking on the role of CEO. The Works is a great business with fantastic colleagues providing a compelling and differentiated offering for our customers. Building on the Company’s established foundations, I look forward to leading The Works in its next phase and creating value for all of our stakeholders.”
The Works outlook
“Since the end of the Period, the Group has delivered an improved LFL sales performance and continues to trade in line with the Board’s expectations for the full financial year. As noted above, we have taken proactive action to refocus the Company’s growth strategy to help ensure a return to profitable growth. We remain confident of the Group’s growth opportunities given our differentiated proposition, offering a wide range of new products at outstanding value, through our unique multi-channel offering, which continues to resonate well with customers.”
Chief Executive Departure
The firm also reported that its Chief Executive is set to depart following a nine year tenure with the firm.
Kevin Keaney left his post as CEO with immediate effect, and has stepped down from the company board.
Chief Financial Officer Gavin Peck, who took on the role in April 2018, has been named as the new CEO, also with immediate effect. He was formerly the commercial director at greeting cards seller Card Factory PLC (LON:CARD).
The Works said its current Head of Finance Rosie Fordham as been appointed as the interim CFO.
Commenting, Chairman, Dean Hoyle, said:
“On behalf of the Board and all of our colleagues, I would like to thank Kevin for his leadership and commitment to the Company over the last nine years. He has helped establish The Works as a leading multi-channel value retailer, has built a fantastic culture and successfully guided the Company through its IPO in 2018. We wish him all the very best for the future.
“We are delighted to appoint Gavin as CEO. Since joining The Works he has played a key role in growing and strengthening the business amidst a challenging retail backdrop. He brings significant industry knowledge as well as commercial and finance experience to lead the business into the future.”
Commenting, Kevin Keaney said:
“After an incredible nine years, I believe now is the right time for me to hand over to a new CEO to lead The Works through its next phase of development. Whilst this has been a very difficult decision, it feels like the right time to take a break, spend time with my family and think about what I want to do next.
“It’s been a privilege to lead The Works over these past years and more recently as a public company. It is a tremendous business supported by incredibly talented colleagues. I am immensely proud of all that we have achieved together and I would like to thank the Board and everyone at The Works for their support through the years. I am delighted to be handing over to Gavin who I have worked closely with over the last 20 months and I am confident that under Gavin’s leadership the business will go from strength to strength.”
The Works bounce back following November warning
In November, the firm warned shareholders about their next trading update statistics, alluding to lower profit levels.
The Works warned warned that full year pre-tax profits are expected to come in ‘significantly below’ the current consensus of £7.3 million.
During the six month period, ending in October total revenue rose 5.4%, although even stripping out the impact of last year’s Squishies fad, like-for-like sales were down 1.9%.
British retail
The Works have seemingly managed to shrug off the slumping British High Street, however it has not been all good for other firms.
Notably, due to the slump on the British high street Mothercare (LON:MTC) announced that the company has entered administration, which will cease all business operations in November.
All 79 of Mothercare’s UK stores are set to shut as administrators get the ball rolling to close this case.
The UK firm “has been loss-making for a number of years”, but international franchises are profitable, PwC said.
In December, it was announced that the baby goods firm was not making sufficient profits and that management had failed to find a buyer.
Joint administrator Zelf Hussain said: “This is a sad moment for a well-known High Street name,” adding that Mothercare “has been hit hard by increasing cost pressures and changes in consumer spending.”
“It’s with real regret that we have to implement a phased closure of all UK stores. Our focus will be to help employees and keep the stores trading for as long as possible,” Mr Hussain said.
The Works have impressively bounced back from a poor update back in November, although shareholders have been warned about lower post-Christmas sales, there can be a sense of relief with the update provided today.
Shares in The Works trade at 34p spiking 9.68%. 16/1/20 11:44BST.
