TheWorks.co.uk PLC (LSE:WRKS, FRA:6EU), the specialist retailer of affordable books, crafts and family activities, saw its shares rise 10% to 59.2p on Thursday after reporting a 47% jump in adjusted EBITDA that beat market forecasts.
Pre-IFRS 16 adjusted EBITDA from continuing operations for the 52 weeks to 3 May came in at approximately £14 million, ahead of market expectations of £13.5 million and up sharply from £9.5 million in the prior year.
Total revenue from continuing operations rose 3.2% to approximately £260 million, with growth achieved across all four of the group's key product categories.
Like-for-like sales increased 3.3%, comfortably outperforming the broader UK non-food retail market, which declined 0.1% over the same period according to British Retail Consortium data.
The final quarter was particularly strong, with like-for-like growth accelerating to 5.3% against a 1.1% decline for the wider market.
Product margins expanded by 240 basis points year on year, driven by tighter supplier negotiations, better stock control, reduced promotional markdowns and an improved product mix.
The group also completed a £2 million cost reduction programme that helped offset industry-wide inflationary pressures.
The Works ended the year with net cash of £3.6 million, comfortably above the £2 million expected by the market, though slightly below the prior year's £4.1 million.
The company closed its transactional website in March, shifting to a purely store-based trading model that management said had a positive impact on footfall in the final quarter.
The group opened a net five new stores during the year, bringing the total to 508, and plans to add a further ten net new locations in the current financial year.
Chief executive Gavin Peck said the results reflected "the diverse and increasing year-round appeal of the group's product proposition" and the growing demand for affordable screen-free activities.
The board said it was confident of achieving its recently upgraded guidance of £15 million in adjusted EBITDA for the current year, with a medium-term target of at least £22.5 million by 2030.