Works co uk PLC (LON: WRKS) have warned their shareholders about their next trading update statistics, alluding to lower profit levels, which has caused their shares to crash.
There hasn’t been much positivity to report for the high street retailer, as the cut-price gifts, arts, toys and books seller warned shareholders about poor business performance in tough economic and political conditions.
Recent like-for-like sales haven’t improved as much as hoped. Management have also been skeptical about Christmas trading, saying that expectations will be hard to fulfill in the busy trading period.
The Works warned warned that full year pre-tax profits are expected to come in ‘significantly below’ the current consensus of £7.3 million.
Chief executive Kevin Keaney bemoaned a consumer environment that ‘has remained challenging’, explaining that The Works has been ‘trading against strong comparators’ following last year’s Squishies ‘Mega Trend’
Keaney insisted The Works has ‘responded decisively to minimise the impact to our performance and are benefiting from easier comparators in the second half’. He is looking ahead to the busy Christmas period ‘fully prepared and ready to deliver for our customers with a fantastic selection of good quality and great value products.
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%.
The British High street has been suffering for a number of years now, as many established retailers struggle to stimulate business amid tough market conditions.
Established retailers such as Mothercare (LON: MTC) have recently entered administration, whilst Thomas Cook (LON:TCG) collapsed only a few weeks back.
Additionally, it was announced that Marks and Spencer (LON: MKS) would shut as many as 120 high street stores to save costs amid periods of slumping business.
While like-for-like sales have improved in recent weeks, they weren’t at a level previously hoped for by management and the full year performance depends on how the business trades over the next six weeks in the run up to Christmas.