REG - TheWorks.co.uk PLC - Full Year Trading Update

Works co ukAnnouncement

18/05/2023 07:00

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RNS Number : 7908Z  TheWorks.co.uk PLC  18 May 2023

18 May 2023

TheWorks.co.uk plc

("The Works", the "Company" or the "Group")

Trading update for the 52 weeks ended 30 April 2023

Robust sales growth in FY23; Adjusted EBITDA expected to be in line with
market forecast; ended the year in a strong financial position.

TheWorks.co.uk plc, the family-friendly value retailer of arts, crafts, toys,
books and stationery, announces a trading update for the 52 weeks ended 30
April 2023 (the "Period" or "FY23").

Trading performance

The Works delivered a resilient performance in FY23 against a challenging
backdrop, with total sales((1)) increasing by 6.1% to £316.6m (FY22:
£298.4m). Stores, which represented 88.8% of total sales, delivered an LFL
sales increase of 7.5%. Online sales declined by 15.0%, resulting in overall
LFL sales growth of 4.2%.

Trading since the previous update((2)) has been broadly as anticipated, with
stores continuing to deliver positive LFL sales growth and online LFLs being
negative. Store LFL sales increased by 12.1% over the 15 weeks, and online
sales declined by 12.5%, giving an overall LFL increase of 9.3% during this
period. The FY22 comparatives weakened in April 2023, due to the aftermath of
the March 2022 cyber security incident, which is reflected in the slight
increase in the recent rate of sales growth.

The Company expects to report an Adjusted EBITDA result for FY23 in line with
its compiled estimate of the market's forecast, which is approximately £9.0m.

Financial position

The Group ended the Period in a strong financial position, with net cash((3))
of £10.2m (FY22: £16.3m). As previously noted, the FY22 comparative included
higher than normal creditor balances, which unwound as expected during FY23.
At the Period end the Group had liquidity availability of £40m, including its
undrawn £30.0m bank facility((4)).

Dividend and publication of results

As noted in the interim results report issued in January 2023, the Board will
consider the level of dividend for FY23 alongside completion of the audited
final results, which will be announced on Friday 21 July 2023.

Outlook

Notwithstanding the ongoing challenging market conditions, the Board remains
confident in the future prospects of the business due to the underlying appeal
and relevance of The Works' proposition, the opportunity to grow sales
profitably through the implementation of its strategy, and the Group's strong
financial position. The Board notes that the compiled estimate of the market's
forecast for FY24 is an Adjusted EBITDA of approximately £10.0m, which it is
comfortable with at the present time.

Appointment of broker

The Group is pleased to announce that Singer Capital Markets has been
appointed as the Company's sole corporate broker with immediate effect.

Gavin Peck, Chief Executive Officer of The Works, commented:

"Our performance in FY23 was delivered against a challenging backdrop. The
business traded well through difficult external conditions, most notably the
inflationary environment, and the recovery from the cyber security incident at
the start of the year. The store performance was strong throughout the period,
demonstrating the enduring value of our store network in communities across
the UK and Ireland. Online sales continued to lag behind, partially reflecting
the normalisation trend seen more widely. We delivered good strategic progress
in the second half of FY23 and have now laid the foundations to continue on
this trajectory in the year ahead. This progress is testament to the passion
and commitment of our brilliant colleagues, who continue to go above and
beyond to deliver for our customers."

 

 Enquiries:

 TheWorks.co.uk plc             via Sanctuary Counsel

 Gavin Peck        CEO

 Steve Alldridge  CFO

 Sanctuary Counsel

 Ben Ullmann                    0207 340 0395           theworks@sanctuarycounsel.com (mailto:theworks@sanctuarycounsel.com)

 Rachel Miller

 Kitty Ryder

 

 (1)  "Total sales" include VAT and are stated prior to deducting the cost of
      loyalty points which are excluded from statutory revenue. A reconciliation
      between total sales and statutory revenue will be included in the Group's
      Annual Report.
 (2)  i.e. during the 15 week period from Monday 16 January 2023 to Sunday 30 April
      2023.
 (3)  Net cash at bank excluding finance leases, and on a non-IFRS 16 basis.
 (4)  The Group's bank facility at the Period end comprised a committed RCF of
      £30.0m with an expiry date of 30 November 2025.

      The Group is in discussions with its bank (HSBC) about reducing the size of
      the facility, which was undrawn throughout most of FY23, to £20.0m, and
      extending its term so that it would expire instead on 30 November 2026. This
      would save approximately £0.15m in annual cash interest costs, and would
      continue to provide liquidity availability significantly in excess of the
      actual anticipated requirement.

 

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