TheWorks.co.uk PLC (LSE:WRKS) saw its first-half losses deepen but has kept its full-year guidance unchanged with profit generation more weighted to the second half and current trading solid.
TheWorks said trading for the 11 weeks to 15 January 2023, saw total like-for-like sales grow by 5.7% compared to a year earlier. Store sales, it said, have remained strong since the festive period, although online sales continued to languish, down 14%, as consumers return to the high street post-coronavirus pandemic.
In results for the 26 weeks to 30 October 2022, the arts and crafts retailer reported pre-tax losses of £10.7mln, compared to a loss of £1mln a year earlier, albeit as revenues grew by 2.4%.
The company said this was due to the “seasonal nature" of its business, with profits usually generated in the second half of the year during the peak Christmas trading period.
The first-half performance, it said, was also impacted by the residual impact of a cyber security incident which forced temporary closures, and headwinds including freight costs, inflation and the normalisation of business rate charges which represented a £3.9mln additional cost.
“We have not been immune from the economic headwinds affecting the retail sector, including higher costs which impacted our profitability in the first half more than last year,” said the company's chief executive Gavin Peck in the results statement.
Expectations for the full year remain unchanged, however, with TheWorks encouraged by the post-first-half trading and its current sales trajectory, although this is balanced by the possibility of a reduction in consumer spending after Christmas, it said.
The group also noted that it expects to incur a higher level of markdown than last year when stock levels were lower.
"Whilst the trading environment remains uncertain, we are encouraged by the strength of our performance during and after the key Christmas period and believe there is significant value to be created from delivering on our strategy in the medium-term,” Peck concluded.