Shares in TheWorks.co.uk PLC (LSE:WRKS) fell 8% to 37.55p on Thursday after the retailer reported a mixed first half, with strong store sales offset by significant online disruption.
The company said it remains on track to meet full-year profit expectations, but acknowledged that operational issues in its e-commerce channel will continue to weigh on performance through the crucial Christmas trading period.
For the 26 weeks to 2 November, total sales edged down 0.3% to £123.8 million. Like-for-like sales rose 0.3%, driven entirely by stores, where like-for-like sales grew 4%.
Management highlighted improved marketing campaigns, refreshed ranges and early benefits from space optimisation, which helped stores outperform the wider market.
Online sales, however, fell 36%. The Works said this reflected “operational challenges” following the shift to a new third-party fulfilment partner.
Reduced outbound capacity and higher costs are expected to persist through peak trading while a longer-term fix is developed.
Profitability held up thanks to a 300-basis-point improvement in product margins and continued progress on a £2 million cost-saving programme. Net debt improved to £5.3 million, down from £8.5 million a year earlier.
Chief executive Gavin Peck said the business had delivered “a strong performance in-store and ongoing margin growth”, adding that the focus on screen-free family activities continued to resonate.
The Works expects to deliver full-year adjusted EBITDA of £11 million, in line with market forecasts.