The Works lowers full year outlook due to uncertainty in run-up to Christmas
The Works has cut its outlook for its 2023 financial year due to uncertainty about how people will behave in the run-up to Christmas during the cost of living crisis.
In a trading update, the retailer said total sales declined by 1.3% year-on-year in its first quarter ending 31 July. While store like-for like sales grew by 1.4% in the period, online like-for-likes fell by 28.6%.
The discount book, toy and art materials retailer was the subject of a cyber security incident at the end of March where actions taken to secure the business impacted store and online trading.
Gavin Peck, chief executive of The Works, said: “We delivered a strong performance in FY22 and will report a better-than-expected profit, as well as reinstating the payment of a dividend.
“Since the start of the financial year we have faced the residual effects of the cyber security incident and increasingly challenging trading conditions.
“The progressive recovery of store trading throughout the period is reassuring and we are pleased with the resilient performance delivered considering the lower consumer confidence.”
The Works highlighted how the general market outlook has deteriorated since the beginning of the calendar year due to low consumer confidence and rising inflation.
It added: “It is not clear how long these market conditions will persist, which creates a heightened degree of uncertainty about how consumers will behave, particularly in the forthcoming Christmas shopping season, The Works’ most important trading period”
As a result of the uncertainty and a desire to maintain a more cautious approach, the retailer has now “materially lowered” its expectations for its 2023 financial year.
Peck added: “The Works is a remarkably resilient business and the group’s financial position remains robust. Although the near-term market conditions are very uncertain, we are confident that our ‘better, not just bigger’ strategy still has a lot more upside to deliver in the medium term.
“As a value retailer we are working hard to ensure that customers can continue to rely on The Works as a destination for good value products, as well as focusing on protecting our profitability as the cost of doing business continues to rise.”
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