The Works returns to profit as lack of Covid rules brings customers back to stores and drives record festive trade
- The company recovered to an £8.7m profit for the 12 months to the start of May
- Demand for ‘fidget frenzy’ products and Richard Osman books was very high
- Summer 2021 was a particularly good period for the Warwickshire-based firm
Discount retailer The Works has bounced back to profit after store reopenings led to a substantial sales rebound and the group achieved another record Christmas.
Having posted a £2.3million loss in the previous financial year, the books, crafts and stationery seller recovered to an £8.7million profit for the 12 months ending May.
Both annual earnings and revenues surpassed pre-pandemic levels, with the latter jumping by 46.5 per cent to £264.6million, thanks to robust business throughout the period in stores and online.
Rebound: Having posted a £2.3million loss in the previous financial year, the books, crafts and stationery seller recovered to an £8.7million profit for the 12 months ending May
Summer 2021 was a particularly good time for the Warwickshire-based company as the release of pent-up demand and a larger-than-normal sale helped to lure customers back to its shops.
This was complemented by increasing orders of ‘fidget frenzy’ products, such as fidget spinners and neon balls, and school supplies ahead of the start of the academic year.
The Works said it then accomplished its best Christmas season ever due to many customers doing their festive shopping in September and October, and despite supply chain disruption delaying the arrival of some festive accessories.
Trade then took a hit in the new year because of low stock volumes and The World went on to receive a further blow from a cyber attack that delayed the delivery of online orders and forced the firm to shut some outlets.
However, the group still reported high demand for branded games, toys and newly-released books in the aftermath of the January sale.
Popular authors with customers have included television quiz show host Richard Osman, whose crime novels, The Thursday Murder Club, and, The Man Who Died Twice, were both Sunday Times bestsellers.
Following the release of today’s trading update, TheWorks.co.uk shares skyrocketed by 34.3 per cent to 38.8p by early afternoon, although their value has plummeted by around 46 per cent so far this year.
The company revealed that total revenues have continued to grow since early May despite online sales have tumbled by over a fifth as the lack of lockdown restrictions has encouraged more Britons to return to the high street.
But it has chosen to maintain full-year forecasts at present levels, given existing inflationary pressures and uncertainty about future consumer spending against a more subdued economic backdrop.
Chief executive Gavin Peck said: ‘We are well placed operationally for Christmas and are gearing up to deliver for our customers, maintaining our commitment to provide them with the products they love at fantastic value.
‘The Works is a resilient business with a proven track record of delivering robust results during times of economic hardship; however, given current conditions, we maintain our cautious view of the year ahead.
‘We remain confident in our ability to continue making good strategic progress and to deliver growth in the medium-term.’