TheWorks.co.uk (LON: WRKS) is the latest retailer to warn that weak consumer confidence and demand will hit trading this year. Increased freight and wage costs and the aftermath of a cyber security incident are creating additional problems for the fully listed arts, books, toys and stationery retailer.
The share price has fallen by more than one-fifth to 36.8p. This is the lowest the share price has been for 18 months, although it is more than double the all-time low in November 2020.
Underlying EBITDA for the year to April 2002, will be around £16.5m, rather than the previous guidance of £15m, because of lower stock provisions. However, in the first quarter of this financial year, like-for-like sales are 2.5% lower, with higher store sales offset by a sharp decline in online sales. The online sales are still 40% ahead of pre-Covid levels and they are less than 10% of the total sales.
The outlook remains uncertain and Christmas trading is important. Sales are expected to grow but not as much as previously expected and they will not provide the additional profit to cover higher costs. Expectations have been “materially lowered”. Revenues of £259.8m and EBITDA of £14.7m was the previous consensus.
Despite the problems, a full year dividend of 2.4p a share is promised.
