TheWorks.co.uk PLC (LON:WRKS) boss Kevin Keaney has stepped down as the book, toy and stationery retailer said it was slowing the pace of its store rollout despite a record Christmas.
Like-for-like sales in the first half of the financial year to 27 October declined 1.9%, as indicated in a profit warning in November, with an interim adjusted loss before tax and exceptional items of £4.3mln.
READ: The Works’ plunges after issuing its second profit warning in six months
The news was a little better for the subsequent 11 weeks to 12 January, with LFL sales rising 1.5% over a period that has been harder than usual for the sector,
Indeed, it’s been far from plain sailing for the company, which said that a “slower start” to the post-Christmas led to “increased discounting to improve sell-through”.
But, swinging back towards positive news, TheWorks highlighted that the seasonal nature the business will result in strong cash generation being delivered in the second half of its financial year, meaning it expects to be “broadly debt free by year-end”.
Keaney, whose nine years at the company included leading the 2018 flotation, has left the board with immediate effect and been replaced by chief financial officer Gavin Peck.
Peck, a former commercial director at FTSE 250-listed Card Factory and CFO at TheWorks since April 2018, said the “solid performance” during the key Christmas trading was driven by growth in both stores and online.
“However, to ensure we are well placed to deliver profitable growth in the medium-term we have taken action to refocus our strategy by opening fewer new stores, with a view to driving improved performance in our existing estate and increasing our focus on cost savings.”
So far 41 net new stores have been opened in the year to date, taking total to 538, with payback of around one year, but in the next financial year expects to open just 20 including relocations.
Shares in the company jumped 12% to 34.69p on Thursday morning, though are still down around almost 80% from their 160p initial public offer price a year and a half ago.