TheWorks.co.uk PLC (LSE:WRKS)'s shares slumped 22.58% as the books and stationery retailer "materially lowered" its fiscal 2023 expectations, being the first big-name retailer on the UK high street to warn about cost-of-living affecting Christmas spends.
Low consumer confidence and rising inflation have contributed to a deterioration in the market outlook since the start of the year, the company said in a statement, and consumer behavior during the upcoming Christmas shopping season, The Works' most important trading season, is "uncertain".
"Whilst we still expect to be able to grow sales in the remainder of fiscal 2023, it is uncertain whether the level of growth will be in line with original expectations and that which is required to offset cost headwinds such as historically high freight costs, which are showing little sign of abating in the short term, as well as increases to the National Living Wage."
"In light of this uncertainty, and reflecting its desire to maintain a more cautious approach in these market conditions, the board has materially lowered its expectations in relation to fiscal 2023's result."
The company reported a 2.5% decline in its first quarter like-for-like sales, although it said its fiscal 2022 underlying EBITDA is expected to be higher than envisaged at around £16.5mln.
The board still anticipates recommending 2.4p per share dividend for fiscal 2022 and said the new committed £30mln bank facility is extended to November 2025.
Many retailers rely on the festive season for their profitability and The Works, with more than 500 shops across the UK, is a leading brand on London's high streets.
Shares were trading down at 36p in London.