TheWorks.co.uk PLC (LSE:WRKS) shares soared in Friday’s early deals after the company reported strong full-year underlying sales, with revenue up 46.5% year-on-year at £264.6mln.
The books and crafts retailer reported £10.2mln of profit before tax for the year to 1 May 2022, versus a £2.8mln loss in the prior year. It highlighted a strengthened balance sheet, with £16.3mln of net cash.
Prompted by the strong performance and confident outlook, the company has reinstated its dividend, and is set to pay 2.4p per share.
"We delivered a strong performance in FY22, with good growth in sales and profits ahead of pre-COVID levels,” said chief executive Gavin Peck.
“This was achieved despite some significant external operational challenges and reflects the ongoing appeal of our proposition, the effective execution of our strategy, a strengthened management team and the collective efforts of our amazing colleagues.
“We closed the year in a much stronger financial position and will be pleased to recommend to shareholders the payment of a dividend.”
Peck added: "Since our last update in August, our online performance has gradually improved and we continue to be encouraged by store sales, which comprise the significant majority of our revenue and have delivered positive LFL sales growth since June.”
In London, the company’s shares jumped 13.81p or 47.79% to trade at 42.71p.
Russ Mould, investment director at AJ Bell, said in a note: “Its [The Works] value proposition is resonating with cash-strapped consumers who are watching their pennies but still want to buy things like birthday presents and the odd affordable treat.
“It also does well with ‘Back to School’ items and has historically been one of the go-to places to buy the latest playground craze, such as fidget spinners and slime in the past.
“The important thing to consider is that consumers are not going to stop spending altogether.
“They’re going to be more selective with their purchases, and that means potentially choosing lower-priced retailers. Theoretically this benefits The Works, but there is no guarantee it will stay on top.”