REG - TheWorks.co.uk PLC - Interim results and Christmas trading update
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RNS Number : 8652P TheWorks.co.uk PLC 22 January 2026
22 January 2026
TheWorks.co.uk plc
("The Works", the "Company" or the "Group")
Interim results for the 26 weeks ended 2 November 2025 and Christmas trading
update
Significant strategic progress driving strong performance in-store and
improved profitability year-on-year. On track to meet full year market
expectations.
The Works, the UK's leading specialist retailer of affordable, screen-free
activities for the whole family, announces its interim results for the 26
weeks ended 2 November 2025 (the "Period" or "H1 FY26"), and an update on
current trading for the 11 weeks ended 18 January 2026.
H1 FY26 financial highlights
· Total like for like (LFL) sales((1)) increased by 0.3%:
o Stores, which represent over 90% of total sales, delivered strong growth, with
sales increasing 4% on a LFL basis, substantially outperforming the wider
non-food retail market, which saw LFL sales growth of 0.6%((2)).
o Online sales declined by 36%, reflecting the impact of operational challenges
experienced following the transition to a new third-party fulfilment partner.
· Total sales of £123.8m, 0.3% lower than the prior year, reflecting the LFL
sales and the timing of store openings and closures during the Period.
· Pre-IFRS 16 Adjusted EBITDA loss of £1.0m (H1 FY25: £2.8m loss) and adjusted
loss before tax of £5.1m (H1 FY25: £6.5m loss), reflecting the seasonality
of the business with profit typically generated in H2((3)).
o Year-on-year (YoY) improvements driven by store LFL sales growth, sustained
product margin growth (+330bps vs H1 FY25) and ongoing cost saving actions,
which offset the impact of cost headwinds.
· The Group ended the Period with an improved net debt position of £5.3m (H1
FY25: £8.5m).
· The Board is not declaring an interim dividend (FY25: nil) and will continue
to assess shareholder distributions as profitability improves and funding
allows.
HY26 HY25
£m £m
Revenue £123.8m £124.2m
Revenue growth (0.3)% 1.3%
LFL sales((1)) 0.3% (0.8)%
Pre-IFRS 16 Adjusted EBITDA((3)) (£1.0m) (£2.8m)
Loss before tax (£5.6m) (£6.9m)
Adjusted loss before tax (£5.1m) (£6.5m)
Basic and diluted earnings per share (8.7p) (9.9p)
Adjusted basic and diluted earnings per share (7.9p) (9.4p)
Net debt((4)) (£5.3m) (£8.5m)
Current trading and outlook highlights
· Trading in the first 11 weeks of H2 FY26 has been in line with Board
expectations:
o Robust store LFL sales up 1.2%, with disrupted online sales declining 51.8%.
o Strong product margin growth and cost savings maintained throughout the
Period.
· Remain on track to deliver FY26 profit in line with market expectations of
pre-IFRS 16 Adjusted EBITDA of £11.0m and sales and profit growth in FY27.
Strategic highlights
Amidst the digital age we all live in, it is becoming increasingly evident
that people want to find other ways to connect and spend their time away from
screens, with growing evidence of the negative impact of too much screen time,
particularly on children. By responding to this growing desire to reduce
screen-time, supporting our customers to find affordable feel-good ways to
spend their time and to connect through activities such as reading, learning,
creativity and play, we believe there is a significant strategic and financial
opportunity for The Works. Our mission - to become the favourite destination
for affordable, screen-free activities for the whole family - is at the heart
of everything we do and is being driven by our 'Elevating The Works' strategy.
We delivered a number of significant initiatives in H1 FY26, marking tangible
progress against this strategy and towards our mission:
· Growing brand fame: Strengthened brand marketing, with a focus on campaigns
supporting families to spend quality time together away from screens. Launched
new products across all categories to enhance all-year-round appeal, with
strong Halloween performance and a robust Back-to-School period.
· Improved customer convenience: Improved store standards and consistency across
the estate, a key driver of store LFL growth ahead of the wider market.
Continued optimisation of the store estate, adding a net two new stores, with
seven new openings, five closures and one relocation. Remain on track for
adding a net five new stores in FY26.
· Being a lean and efficient operator: Drove sustained product margin growth and
delivered efficiencies in our store distribution centre, aided by the
investment in a new mezzanine level. Remain on track to deliver £2m cost
savings in FY26.
Trading update for the 11 weeks ended 18 January 2026
We delivered a robust performance over the 11 weeks to 18 January 2026,
against a challenging backdrop with continuing subdued consumer confidence.
Store LFL sales increased 1.2%, which was ahead of the wider non-food retail
market, which saw a decline of 0.4%((5)). This was driven by customers seeking
our affordable, screen-free activities to enjoy with family members over the
festive period and our Black Friday offers that resonated well with
value-conscious consumers.
Online capacity continued to be constrained by the operational challenges
faced by our third-party fulfilment provider, as reported in our November
trading update. As a result, online LFL sales declined 51.8%, in-line with our
revised expectations as we went into the festive period, resulting in total
LFL sales declining 4.2%. Work is ongoing to address the operational
challenges. As the volume demand has normalised post-peak the YoY sales
decline has reduced.
We have continued to deliver cost savings and our ongoing focus on increasing
product margins resulted in strong growth, up +200bps YoY. This was delivered
despite our bigger Black Friday promotions and the need to clear more stock
through the post-Christmas sale following the lower online sales.
Outlook
We are pleased with the ongoing progress being delivered and particularly the
way in which our offering of affordable, screen-free activities for the whole
family is resonating with customers. This has resulted in a positive in-store
performance in the second half-to-date, which is set to continue as new ranges
land in the Spring and we deliver further strategic progress.
We are disappointed with the fulfilment challenges experienced at our
third-party online fulfilment provider since our transition to them in
September, have taken sustained action to mitigate the impact and are working
closely with our provider who remains committed to delivering a long-term
solution.
Our cash position further improved following Christmas, with £15.5m of cash
as of 18 January 2026 (£14.7m as at 19 January 2025) and we expect to end the
financial year with net cash broadly in-line with the prior year, which was
£4.1m.
We expect a return to sustained sales growth, and this, coupled with ongoing
product margin growth and cost saving action, will offset external cost
headwinds in FY26 and into FY27. We have good visibility over our full year
performance, having delivered a peak trading period in line with expectations,
and therefore remain on track to deliver FY26 profit in line with market
expectations of pre-IFRS 16 Adjusted EBITDA of £11.0m and expect to deliver
further profit growth and shareholder value in the years ahead.
Gavin Peck, Chief Executive Officer of The Works, commented:
"At the heart of everything we do is our mission to become the favourite
destination for affordable, screen-free activities for the whole family. This
has never been more relevant given the digital age we all live in and our
action to deliver this in the current financial year has been well-received by
customers, existing and new.
"The strategic initiatives delivered in the first half of the financial year
have been critical in driving a strong performance in-store and an improvement
in profitability year-on-year. Along with the wider sector, we have felt the
impact of a challenging consumer backdrop, however we continued to see a
positive response to our excellent value and new products over the festive
period.
"Guided by our strategy, alongside the hard work of our colleagues and support
of our loyal customers, we are well-positioned to deliver sales and profit
growth in the remainder of the financial year and beyond."
Interim results presentation
A copy of the H1 FY26 interim results presentation will be made available on
the Company's website (https://corporate.theworks.co.uk/investors/
(https://protect.checkpoint.com/v2/r06/___https:/corporate.theworks.co.uk/investors/___.ZXV3Mjp0aGV3b3Jrc3N0b3JlczpjOm86MDY2MTgzNTJlNGIxYWQ1NjViZDQ3ZGUxZGM2ODM2N2E6NzphMWQ0OjFjMzI2MzU5ZWRlYTc3NWE5MmEyMzg4NzU2M2VkNGIxOWRiM2QyMzZmMjgwYTM5NTBhZDRhNzgzOTRlYzc4ZDc6cDpGOkY)
).
A presentation and Q&A for all existing and potential shareholders will be
held via Investor Meet Company at 12:30pm today (Thursday 22(nd) January
2026). Investors can register here:
https://www.investormeetcompany.com/theworkscouk-plc/register-investor
(https://protect.checkpoint.com/v2/r06/___https:/www.investormeetcompany.com/theworkscouk-plc/register-investor___.ZXV3Mjp0aGV3b3Jrc3N0b3JlczpjOm86MDY2MTgzNTJlNGIxYWQ1NjViZDQ3ZGUxZGM2ODM2N2E6Nzo1NjA4OmE5MGU5Y2EyMThkNzU4ODY1OGRmOTIyMDM2ODkyMDQ1NDYyY2ZkMjg1Y2FkZTYwMWQ3M2QyMzJmNmY5YzFjNzg6cDpGOkY)
Enquiries:
TheWorks.co.uk plc via Sanctuary Counsel
Gavin Peck CEO
Rosie Fordham CFO
Singer Capital Markets (Nomad and Broker) 020 7496 3000
Peter Steel
Sara Hale
Jalini Karalavy
Samed Ethemi
Sanctuary Counsel 0207 340 0395
Rachel Miller theworks@sanctuarycounsel.com (mailto:theworks@sanctuarycounsel.com)
Hannah Butler
Yasmine Fowler
Footnotes:
(1) Total LFL sales is the growth/decline in gross sales from stores which have
been trading for the full financial Period (current and previous year), and
from the Group's online store.
(2) Data from the British Retail Consortium (BRC) showed non-food sales increased
by 0.6% year on year during the six months to the end of October 2025.
(3) Adjusted profit figures exclude Adjusting items. See Notes 4 (Alternative
performance measures) and 5 (Adjusting items) of the attached condensed
unaudited financial statements for details of Adjusting items.
(4) Net debt at bank excluding finance leases, on a pre-IFRS 16 basis.
(5) Data from the British Retail Consortium (BRC) showed non-food sales declined
0.4% during the 9 weeks of November and December 2025.
Notes for editors:
The Works is the UK's leading specialist retailer of affordable, screen-free
activities for the whole family, providing customers with fantastic value
across four product categories: arts and crafts, stationery, toys and games,
and books. The Group operates a network of over 500 stores in the UK &
Ireland, as well as trading online at TheWorks.co.uk.
CEO Report
Overview
Guided by our mission to become the favourite destination for affordable,
screen-free activities for the whole family, everyone at The Works is focused
on supporting people to find alternative, feel-good ways to spend their time
away from screens. We are pleased with the progress made in the first half of
FY26. The continued execution of our 'Elevating The Works' strategy has
resulted in sustained operational improvements, driven a strong in-store
performance, enabled us to further grow our margins, deliver cost efficiencies
and improved profitability year-on-year (YoY). As a result, we are on track to
deliver FY26 profit in line with market expectations and are well positioned
to deliver higher revenues, profit growth and shareholder value in the years
to come.
H1 trading performance
The ongoing delivery of our 'Elevating The Works' strategy enabled us to
deliver a robust trading performance in the first half of FY26. This was
despite a challenging retail environment, with subdued consumer confidence and
soft UK non-food retail sales throughout the Period. Total like-for-like (LFL)
sales increased 0.3%, reflecting strong store sales offset by lower online
sales stemming from fulfilment challenges at our third-party provider that we
are addressing. We delivered total sales of £123.8m (H1 FY25: £124.2m),
which was marginally lower YoY, reflecting the LFL sales growth offset by the
timing of store openings and closures (closures fell early in the Period
whereas openings were weighted towards the end).
Stores, which comprise over 90% of sales, delivered LFL growth of 4%, well
ahead of the wider non-food retail market that saw growth of 0.6%. Store
performance was supported by more customer-focused campaigns and new products
landing across all categories, all focused on connecting people with
affordable, screen free things to do. Improved store standards, customer
service and the positive impact from our initial space optimisation
initiatives also supported store LFL growth.
Online sales, which represent less than 10% of sales, declined by 36%. This
reflects the impact of operational challenges experienced following the
transition to a new third-party fulfilment partner in September. We took
action to reduce demand to help ease capacity constraints and maximise sales
and profit from the reduced capacity, however our third-party fulfilment
partner experienced persistent operational challenges and was unable to
resolve these ahead of peak trading. We are disappointed to have been faced
with these challenges but are working with the provider to ensure that
together we deliver a solution.
Sustained product margin growth (+330bps vs H1 FY25) and ongoing cost saving
action enabled us to more than offset cost headwinds and the aforementioned
challenges faced with our online channel. This resulted in pre-IFRS 16
Adjusted EBITDA improving 64% to a loss of £1.0m (H1 FY25: £2.8m loss) and
Adjusted loss before tax of £5.1m (H1 FY25: £6.5m loss). This is as expected
given the seasonality of the business, which is typically loss-making in the
first half of the financial year, with profit being generated in H2.
H1 strategic progress
We have delivered a number of important strategic initiatives in the first six
months of FY26, making clear progress against our 'Elevating The Works'
strategy. Our efforts have been focused on helping customers to discover
affordable, screen-free ways to spend their time, which in our current digital
age is more important than ever as people look to reduce screen-time and find
ways to connect in person.
Underpinned by three strategic drivers: growing our brand fame, improving
customer convenience and being a lean and efficient operator, the strategy is
focused on The Works becoming the favourite destination for affordable,
screen-free activities for the whole family.
Growing brand fame
With our clearly defined mission and brand positioning, we are focused on
growing our loyal customer base by getting more people familiar with The Works
and to love what we do. This has been a key driver of the strong in-store
performance delivered in the first half. Initiatives delivered in H1 FY26
include:
· Driven by customer insights that parents want to limit screen time and feel
overwhelmed by the challenge of keeping children entertained, we enhanced
marketing of our brand. This included the promotion of our #TimeWellSpent
strapline via a new website blog, and work with influencers and affiliates. We
also launched new customer-focused marketing campaigns, to show our customers
ways to connect and spend their time away from screens:
o Our 'Summer Well Spent' campaign aimed to inspire parents with screen-free
ways to keep their children entertained all summer long.
o We established a 'Boredom Board', welcoming children to help share ideas to
reduce the issue of boredom over the summer holidays while encouraging
activities away from screens, which was supported by consumer research.
· Further evolution of our product proposition with greater newness across all
categories, resulting in particularly strong performances in our Toys and
Games and own brand Art and Craft categories.
· Establishing greater all-year-round appeal of the brand, leveraging moments
across the entire calendar for marketing campaigns and new product ranges, to
reduce our reliance on Christmas. This included a strong Halloween performance
and a robust Back-to-School period, which was ahead of the wider market.
· Increased focus on delivering a high standard and consistent customer service
in-store, including the introduction of a new Customer Experience programme to
recognise the work of colleagues going above and beyond for our customers. We
also delivered more in-store demonstrations to engage customers and bring our
product offering to life.
Improving customer experience
We want to provide our customers with the ranges they want, in the locations
they want them, making it even easier to shop with us and improving overall
experience and satisfaction. We have made strong progress in the first half of
FY26, including:
· Improved distribution of stock across the store estate, with a focus on better
product availability for high turnover 'platinum' stores and reducing
stock-holding in smaller 'compact' stores.
· Continued optimisation of the store estate, with seven new openings, five
closures and one relocation. We added a net two stores, growing to a more
profitable portfolio of 505 stores at the Period end. We are on track for a
net five new store openings in FY26 and are building a strong pipeline of
opportunities to support our plans to add a net ten new stores in FY27.
· Improved store standards and consistency across the estate, through the
implementation of a 'What Good Looks Like' programme, which was supported by
the development of our field management capability.
· Continued store space optimisation including rolling out selected extended
ranges from the trials launched in Q4 FY25 to more than 100 stores. We also
implemented a university trial, which included extended art ranges, to further
optimise use of space. We have plans for further trials in H2 and FY27, led by
data-driven insight.
Being a lean and efficient operator
We are developing a business model that is low cost and efficient, to better
enable us to continue offering our customers great value products and to
support ongoing profit margin growth. Progress in the first half of FY26
includes:
· Implementation of better buying processes, improved stock management and
selective price increases. This, combined with freight savings and an improved
foreign exchange rate, supported a 330bps improvement in H1 FY26 product
margin.
· Notable progress against our £2m cost reduction programme for FY26, with
savings in central people costs and efficiencies in our store distribution
centre (DC) supported by the successful investment in a new mezzanine level
during the Period.
· Continuing to enhance our systems and infrastructure, including launching a
pilot for new till hardware that is faster, offers a customer facing screen
and uses less power. As part of our systems transformation plans, we have also
developed plans for a back-office systems refresh, with work beginning in H2
on new 'Range Planning' software. Other back-office systems will be refreshed
in the coming years.
Board and leadership changes
There have been some changes to our PLC Board during the first half, including
the appointment of Nick Wharton as an Independent Non-Executive Director, who
has brought very relevant sector and plc experience. As part of the Board's
succession planning, Nick replaced Harry Morley who did not seek re-election
at September's AGM after seven years of valuable contribution to The Works.
Simon Hathway stepped down from his role as Independent Non-Executive Director
following the Period end to take on a full-time executive role. The search to
identify his successor is well-progressed and we look forward to providing an
update in due course.
ESG
Our People and Planet commitments represent our approach to creating a
lasting, positive impact for our people, our communities and our planet. Our
commitment to 'Doing Business Better' underpins our strategic drivers and is
our way of ensuring that our colleagues are motivated and supported, so that
they can continue to inspire our customers to read, learn, create and play.
Illustrative of this progress was the positive result in our employee
engagement survey with our new provider, WorkL, where we achieved a 3-star
'Excellent' accreditation and 76% average happiness score. With a 77%
colleague participation rate, we are delighted with how the results reflect
the strong culture and shared purpose we have built together.
We are continuously looking for ways to further improve. We refreshed and
relaunched our organisational values and behaviours to further strengthen and
embed our positive culture. We also introduced a new performance cycle along
with a comprehensive career development framework.
Outlook
We are encouraged by the progress made in FY26 to-date and the positive
performance delivered in-store, particularly against a consumer backdrop that
remains persistently challenging. We are working with our third-party
fulfilment provider to ensure that together we deliver a solution that will
rectify the challenges impacting our online channel and will provide an update
in due course.
We are confident in our ability to continue delivering sales and product
margin growth and cost efficiencies, offsetting continued external cost
headwinds in the remainder of FY26. We therefore remain on track to deliver
FY26 profit in line with market expectations of pre-IFRS 16 Adjusted EBITDA of
£11.0m, and expect to deliver further strategic progress, a significant
improvement in financial and operational performance and shareholder value
over the medium term.
Gavin Peck
Chief Executive Officer
Financial Report
Overview
This report covers the 26-week Period ended 2 November 2025 ("HY26", or the
"Period") and refers to the comparative "HY25" Period of the 26 weeks ended 3
November 2024. The Company's sales and profitability is historically
concentrated in the second half of the year, which includes the peak Christmas
trading period.
HY26 HY25
Revenue £123.8m £124.2m
Revenue growth (0.3%) 1.3%
LFL sales growth((1)) 0.3% (0.8%)
Pre-IFRS 16 Adjusted EBITDA((2)) (£1.0m) (£2.8m)
Loss before tax (£5.6m) (£6.9m)
Adjusted loss before tax((2)) (£5.1m) (£6.5m)
Net debt((3)) (£5.3m) (£8.5m)
((1) ) LFL sales growth is the growth in gross sales from stores
which have been trading for the full financial Period (current and previous
year), and from the Group's online store.
((2) ) Adjusted profit figures exclude Adjusting items. See notes
4 (Alternative performance measures) and 5 (Adjusting items) of the condensed
financial statements included in this RNS.
((3) ) Net debt excludes finance leases and is stated on a
pre-IFRS 16 basis.
Revenue
Total revenue was lower by 0.3% to £123.8m (HY25: £124.2m), with total LFL
sales increasing 0.3%, due to:
Positive store LFL sales growth of 4.0%, reflecting strong growth in existing
stores from delivery of strategic initiatives, amidst a challenging external
market (BRC reported non-food retail LFL average increase of 0.6% over the
same Period).
Online sales decline of 36.1% primarily reflecting the significant fulfilment
challenges experienced from the move to our new third-party fulfilment
provider in early September. A number of material interventions were made to
the customer offer to dampen customer demand and preserve the experience for
those customers who continued to shop in this channel.
We continued to make good progress against one of our strategic priorities,
'Store optimisation'. As a result, we traded from a smaller, more profitable
estate during HY26 compared to HY25, resulting in a small decline in revenue
year-on-year. We ended the Period with 505 stores, having opened seven stores,
closed five stores, and relocated one. The closing store portfolio represented
an increase of net two new stores from 503 at the FY25 year end.
Gross profit
HY26 HY25 Variance Variance
£m % of revenue £m % of revenue £m %
Revenue 123.8 124.2 (0.4) (0.3)
Less: Cost of goods sold (46.3) (50.5) 4.2 8.3
Product gross margin 77.5 62.6 73.7 59.3 3.8 5.2
Store payroll (27.1) (21.9) (24.7) (19.9) (2.4) (9.7)
Store property and establishment costs (24.8) (20.0) (24.4) (19.7) (0.4) (1.6)
Brand marketing and transaction fees (2.1) (1.7) (1.2) (1.0) (0.9) (75.0)
Online variable costs (5.4) (4.4) (6.6) (5.3) 1.2 18.2
Store depreciation (excluding IFRS 16) (1.4) (1.1) (1.0) (0.8) (0.4) (40.0)
IFRS 16 impact (excluding Adjusting items) 0.8 0.6 0.0 0.0 0.8 100
Adjusting items (0.5) (0.4) (0.3) (0.3) (0.2) (66.7)
Gross Profit Per Financial Statements 17.0 13.7 15.5 12.5 1.5 9.7
Product gross margin increased by 330bps to 62.6% in HY26 (HY25: 59.3%),
primarily reflecting the continued focus on delivering margin growth from a
combination of better buying (negotiations with suppliers and control of
product mix), reduced markdown from improved stock management, as well as
selective price increases. Product margin further benefited from the achieved
hedging rate on inventory purchased in US dollars which was favourable
year-on-year, (HY26 US dollar: GB pound rate 1.28 versus 1.26 in HY25), along
with favourable HY26 container freight rates during the Period, with average
container rates in HY26 of $2.6k versus $2.9k in HY25.
Store payroll costs increased by £2.4m, driven by the 6.7% increase in the
National Living and Minimum Wage ('NLMW') and changes to employer NI
contributions which created a combined £2.3m cost headwind.
Store property and establishment costs increased by £0.4m, reflecting savings
in store electricity costs more than offset by inflationary cost increases in
service charge and increased turnover rent reflecting the LFL store
performance.
Online variable costs decreased by £1.2m, reflecting the significant
reduction in revenues resulting from the third-party fulfilment challenges.
Our priority throughout the Period was to preserve customer experience and
loyalty, and to protect profitability. We therefore took action to manage
customer demand, for example by reducing online marketing spend, and to
increase Average Order Values. The lower outbound volumes led to lower parcel
delivery costs, offsetting significantly higher (53%) costs per order due to
productivity inefficiencies within the third-party fulfilment centre.
Operating profit
HY26 HY25 Variance Variance
£m % of revenue £m % of revenue £m %
Gross profit per financial statements 17.0 13.7 15.5 12.5 1.5 9.7
Distribution expenses (5.7) (4.6) (6.1) (4.9) 0.4 6.6
Distribution depreciation (0.1) (0.1) (0.1) (0.0) (0.0) 0
Distribution Costs per financial statements (5.8) (4.7) (6.2) (5.0) 0.4 6.5
Administrative expenses (13.3) (10.7) (13.6) (11.0) 0.3 2.2
Administrative depreciation (0.9) (0.7) (1.0) (0.8) 0.1 10.0
IFRS 16 impact (excluding Adjusting items) 0.3 0.2 0.9 0.7 (0.6) (66.7)
Administrative Costs per financial statements (13.9) (11.2) (13.8) (11.1) (0.1) (0.7)
Operating loss per financial statements (2.7) (2.2) (4.4) (3.5) 1.7 38.6
Distribution expenses (before depreciation), decreased by £0.4m compared with
the prior Period. This reflected continuing efficiencies driven by improved
ways of working in the stores Distribution Centre ("DC"), together with
reduced external storage costs over peak (supported by the investment in our
new mezzanine level within the DC that provided additional storage capacity
and improved productivity). These savings more than offset the combined £0.2m
impact of the April 2025 NLMW and National Insurance contribution increases on
distribution labour costs.
Administration expenses (before depreciation and IFRS 16) decreased by £0.3m
compared with the prior Period, primarily due to the savings realised from the
support centre restructure, implemented in April 2025, which was part of the
£2m cost saving initiative in FY26.
Operating profit reconciliation to pre-IFRS 16 Adjusted EBITDA
HY26 HY25 Variance Variance
£m % of revenue £m % of revenue £m %
Operating loss per financial statements (2.7) (2.2) (4.4) (3.5) 1.7 38.6
Add back depreciation, amortisation included in Operating profit 2.4 1.9 2.1 1.7 0.3 14.3
Less IFRS 16 charges included in Operating profit (excluding Adjusting Items) (1.2) (1.0) (0.8) (0.6) (0.4) (50)
Add back Adjusting items((1)) 0.5 0.4 0.3 0.2 0.2 66.7
Pre-IFRS 16 Adjusted EBITDA((1)) (1.0) (0.8) (2.8) (2.3) 1.8 64.3
((1) ) Adjusted profit / (loss) excludes Adjusting items. See
Notes 4 (Alternative performance measures) and 5 (Adjusting items) of the
attached condensed financial statements.
Depreciation, amortisation and IFRS 16 adjustments reflect higher depreciation
and amortisation charges (£0.3m) as a result of FY25 year-end impairment
reversals increasing asset values, offset with lower IFRS 16 adjustments
(£0.4m) primarily due to higher underlying asset values from new leases in
the Period.
Adjusting items of £0.5m (HY25: £0.3m charge) reflect the one-off cost of
transitioning to the new third-party fulfilment provider.
Net financing expense in the Period was £2.8m (HY25: £2.4m), mostly relating
to IFRS 16 notional interest on the calculated lease liability.
Interest expense relating to bank facilities was £0.6m (HY25: £0.4m),
reflecting increased usage of the rolling credit facility as a consequence of
the earlier pre-peak stock intake as noted below.
Profit before tax
Loss before tax was £5.6m (HY25: £6.9m loss) which includes the £0.5m
charge (HY25: £0.3 charge) for Adjusting items (described above and in Note 5
(Adjusting items)).
Tax
The Group's total income tax credit in respect of the Period was £0.2m (HY25:
£0.6m credit). The effective tax rate on the total loss before tax was 2.9%
(HY25: 9.3%) whilst the effective tax rate on the total loss before Adjusting
items was 3.1% (HY25: 9.7%).
Earnings per share
The basic and diluted loss per share for the Period were 8.7 pence (HY25: 9.9
pence loss). Adjusted basic and diluted loss per share for the Period were 7.9
pence (HY25: 9.4 pence).
Capital expenditure
Capital expenditure in the Period was £3.5 million (HY25: £2.2m).
HY26 HY25 Variance
£'m £'m £m
New stores and relocations (1.0) (0.7) (0.3)
Store refits, lease renewal and maintenance (0.8) (0.7) (0.1)
IT hardware and software (0.9) (0.8) (0.1)
Warehouse (0.6) - (0.6)
Other (0.2) - (0.2)
Total capital expenditure (3.5) (2.2) (1.3)
· The increased investment in new stores and relocations reflects
the seven new stores and one relocation opened in the Period, compared to
three new stores and two relocations in the comparative Period of FY25.
· The £0.6m increased expenditure in the warehouse reflects the
introduction of a mezzanine floor in the retail distribution centre, which has
increased storage capacity and enhanced operational efficiency.
Inventory
Inventory was valued at £52.1m at the end of the Period (HY25: £51.7m). The
operating cycle of the business causes maximum stock levels to occur prior to
the Christmas sales peak and therefore stock levels are typically higher at
the half year end compared with the year end.
The increased gross stock level compared to the prior Period reflects lower
than anticipated online sales due to the operational challenges following the
transition to a new third-party online fulfilment provider and the planned
build of pre-peak stock earlier than in the prior year which is reflected in
the year-on-year decrease in stock in transit.
Higher inventory provisions than the prior year, reflects a higher shrinkage
provision for stock held at the third-party online fulfilment provider,
together with a higher obsolescence provision reflecting the lower sell
through of certain product lines. Underlying store shrinkage provisions are in
line with the prior year.
HY26 HY25 Variance
£m £m £m
Gross stock 46.9 42.9 4.0
Less: provisions (3.3) (2.5) (0.8)
Stock net of provisions 43.6 40.4 3.2
Stock in transit 8.5 11.3 (2.8)
Stock per balance sheet 52.1 51.7 0.4
Cash flow
The table below shows a summarised pre IFRS 16 presentation of cash flow.
The Group ended the Period with net debt of £5.3m (HY25: £8.5m net debt).
The net cash outflow before exchange rate movements for the Period was £9.3m
(HY25: outflow of £10.2m), reflecting reduced operating losses in the Period
partially offset by increased capital investment together with the adverse
impact on working capital of accelerating the build of inventory in advance of
the peak Christmas trading period.
HY26 HY25 Variance
£m £m £m
Operating loss (2.7) (4.4) 1.7
Other operating cashflows((1)) 1.3 (0.2) 1.5
Net movement in working capital (3.1) (2.3) (0.8)
Net Cash from Investing Activities (3.5) (2.2) (1.3)
Tax paid (0.5) (0.5) (0.0)
Interest and financing costs (0.8) (0.3) (0.5)
Purchase of Shares into the Employee Benefit Trust (0.0) (0.3) 0.3
Cash Flow before loan Movements (9.3) (10.2) 0.9
Drawdown of RCF 9.0 9.0 0.0
Exchange rate movements (0.1) 0.1 (0.2)
Net increase /(decrease) in cash and cash equivalents (0.4) (1.1) 0.7
Opening net cash balance excluding IAS 17 leases 4.1 1.6
Closing net debt balance excluding IAS 17 leases (5.3) (8.5)
((1) ) Other operating cashflows relate to
pre-working capital movements, excluding tax and interest. See Condensed
consolidated cash flow statement of the attached condensed financial
statements.
Bank facilities and financial position
The Group continues to have a Revolving Credit Facility (RCF) of £20.0m,
which provides ample liquidity and is utilised to support the build of stock
prior to peak trading. The terms of this financing agreement expire on 30
November 2026. The Group is in discussions regarding the renewal of the
facility which it expects to conclude before approval of the FY26 Annual
Report and Accounts in July 2026.
Capital distributions
The Board is not proposing to declare an interim dividend. The potential for
shareholder distributions, including dividends and share buybacks, will
continue to be assessed against other opportunities for investment as
profitability improves and funding allows.
Employee Benefit Trust funding for the purposes of share schemes
To manage dilution of existing shareholder interests, the Board's intention is
to continue providing funding to the Company's Employee Benefit Trust as
appropriate. This will enable the EBT to continue purchasing shares in the
market that can subsequently be used to satisfy the exercise of options under
employee share schemes, as it has done in each of the last two financial
years. SAYE exercises may be satisfied through the issue of new shares in the
future.
Rosie Fordham
Chief Financial Officer
22 January 2026
Unaudited Condensed Consolidated Income Statement
For the 26 weeks ended 02 November 2025
26 weeks to 02 November 2025 26 weeks to 03 November 2024 52 weeks to 04 May 2025
Adjusted Adjusting items Total Adjusted Adjusting items Total Adjusted Adjusting items Total
Note £000 £000 £000 £000 £000 £000 £000 £000 £000
Revenue 3 123,843 - 123,843 124,200 - 124,200 277,039 - 277,039
Cost of sales 5 (106,348) (488) (106,836) (108,362) (316) (108,678) (227,697) 4,408 (223,289)
Gross profit 17,495 (488) 17,007 15,838 (316) 15,522 49,342 4,408 53,750
Other operating income 4 - 4 4 - 4 8 - 8
Distribution expenses (5,824) - (5,824) (6,160) - (6,160) (11,628) - (11,628)
Administrative expenses (13,932) (1) (13,933) (13,788) - (13,788) (28,392) (640) (29,032)
Operating (loss)/profit (2,257) (489) (2,746) (4,106) (316) (4,422) 9,330 3,768 13,098
Finance income 6 33 - 33 - - - 35 - 35
Finance expense 6 (2,873) - (2,873) (2,431) - (2,431) (4,790) - (4,790)
Net financing expense (2,840) - (2,840) (2,431) - (2,431) (4,755) - (4,755)
(Loss) / profit before tax (5,097) (489) (5,586) (6,537) (316) (6,853) 4,575 3,768 8,343
Tax 9 160 - 160 635 - 635 (165) - (165)
(Loss) / profit for the Period (4,937) (489) (5,426) (5,902) (316) (6,218) 4,410 3,768 8,178
Basic (loss)/earnings per share (pence) 10 (7.9) (8.7) (9.4) (9.9) 7.1 13.1
Diluted (loss)/earnings per share (pence) 10 (7.9) (8.7) (9.4) (9.9) 7.1 13.1
All results arise from continuing operations. The (loss)/ profit for the
Period is attributable to equity holders of the Parent company.
Unaudited Condensed Consolidated Statement of Comprehensive Income
For the 26 weeks ended 02 November 2025
26 weeks to 26 weeks to 52 weeks to
02 November 2025 03 November 2024 04 May 2025
£000 £000 £000
(Loss) / profit for the Period (5,426) (6,218) 8,178
Items that may or may not be recycled subsequently into profit and loss
Cash flow hedges - changes in fair value 1,416 (1,058) (1,851)
Cash flow hedges - reclassified to profit and loss 15 404 340
Cost of hedging reserve - changes in fair value (32) 298 (273)
Cost of hedging reserve - reclassified to profit and loss 154 183 366
Tax relating to components of other comprehensive income 598 190 (409)
Other comprehensive income/ (expense) for the Period, net of income tax 2,151 17 (1,827)
Total comprehensive (expense) / income for the Period attributable to equity (3,275) (6,201) 6,351
shareholders of the Parent
Unaudited Condensed Consolidated Statement of Financial Position
As at 02 November 2025
02 November 2025 03 November 2024 04 May 2025
Note £000 £000 £000
Non-current assets
Intangible assets 12 2,254 2,177 2,168
Property, plant and equipment 13 13,550 11,936 12,583
Right of use assets 14 64,139 60,106 61,830
Deferred tax assets 4,279 4,860 3,514
84,222 79,079 80,095
Current assets
Inventories 15 52,113 51,721 34,985
Trade and other receivables 7,210 11,980 6,149
Derivative financial assets 19 198 90 -
Current tax asset 2,059 1,645 1,603
Cash and cash equivalents 3,706 522 4,118
65,286 65,958 46,855
Total assets 149,508 145,037 126,950
Current liabilities
Interest bearing loans and borrowings 16 9,000 9,000 -
Lease liabilities 14 18,284 20,580 18,646
Trade and other payables 47,977 51,712 32,851
Provisions 17 686 303 798
Derivative financial liabilities 19 701 605 1,879
76,648 82,200 54,174
Non-current liabilities
Lease liabilities 14 59,604 58,716 56,284
Provisions 17 733 634 650
60,337 59,350 56,934
Total liabilities 136,985 141,550 111,108
Net assets 12,523 3,487 15,842
Equity attributable to equity holders of the Parent
Share capital 18 625 625 625
Share premium 18 28,322 28,322 28,322
Merger reserve (54) (54) (54)
Share based payment reserve 2,491 2,771 2,274
Hedging reserve (207) (139) (2,122)
Retained earnings (18,654) (28,038) (13,203)
Total equity 12,523 3,487 15,842
Unaudited Condensed Consolidated Statement of Changes in Equity
Attributable to equity holders
Share based
Share Share Merger Payments Hedging Retained Total
capital premium reserve reserve reserve(1) earnings equity
For the 26 Weeks Ended 02 November 2025 £000 £000 £000 £000 £000 £000 £000
At 04 May 2025 625 28,322 (54) 2,274 (2,122) (13,203) 15,842
Total comprehensive income / (expense) for the Period
Loss for the Period - - - - - (5,426) (5,426)
Other comprehensive income - - - - 2,151 - 2,151
Total comprehensive income / (expense) for the Period - - - - 2,151 (5,426) (3,275)
Hedging gains and losses and costs of hedging transferred to the cost of - - - - (236) - (236)
inventory
Transactions with owners of the Company
Share-based payment charges - - - 217 - - 217
Acquisition of treasury shares - - - - - (25) (25)
Total transactions with owners - - - 217 - (25) 192
Balance at 02 November 2025 625 28,322 (54) 2,491 (207) (18,654) 12,523
For the 26 Weeks Ended 03 November 2024 £000 £000 £000 £000 £000 £000 £000
At 05 May 2024 625 28,322 (54) 2,583 129 (21,519) 10,086
Total comprehensive income / (expense) for the Period
Loss for the Period - - - - - (6,218) (6,218)
Other comprehensive income - - - - 17 - 17
Total comprehensive income / (expense) for the Period - - - - 17 (6,218) (6,201)
Hedging gains and losses and costs of hedging transferred to the cost of - - - - (285) - (285)
inventory
Transactions with owners of the Company
Share-based payment charges - - - 188 - - 188
Acquisition of treasury shares - - - - - (301) (301)
Total transactions with owners - - - 188 - (301) (113)
Balance at 03 November 2024 625 28,322 (54) 2,771 (139) (28,038) 3,487
(1 ) Hedging reserve includes £211k in relation
to changes in forward points which are recognised in other comprehensive
income and accumulated as a cost of hedging within the hedging reserve
(£(61)k for the 26 weeks ended 03 November 2024, £330k for the 52 weeks
ended 04 May 2025).
Unaudited Condensed Consolidated Cash Flow Statement
For the 26 weeks ended 02 November 2025
26 weeks to 26 weeks to 52 weeks to
02 November 2025 03 November 2024 04 May 2025
Note £000 £000 £000
Cash Flows From Operating Activities
(Loss) / profit for the Period (5,426) (6,218) 8,178
Adjustments for:
Depreciation of property, plant and equipment 13 1,910 1,399 3,854
Impairment of property, plant and equipment - - 463
Reversal of impairment of property, plant and equipment - - (975)
Depreciation of right-of-use assets 14 10,662 10,203 18,385
Impairment of right-of-use assets - - 2,180
Reversal of impairment of right-of-use assets - - (7,807)
Amortisation of intangible assets 12 568 390 1,213
Impairment of intangible assets - - 141
Reversal of impairment of intangible assets - (471)
Derivative exchange loss / (gain) 236 285 424
Financial income 6 (33) - (35)
Financial expense 6 639 388 689
Interest on lease liabilities 14 2,234 2,043 4,101
Loss on disposal of property, plant and equipment 13 37 492 282
Profit / loss on disposal of right of use assets and lease liability 14 (10) (358) 845
Profit relating to lease modifications 14 (62) (320) (193)
Share based payment charges 217 188 353
Taxation 9 (160) (635) 165
Operating cash flows before changes in working capital 10,812 7,857 31,792
(Increase) / decrease in trade and other receivables (1,070) (3,512) 2,081
(Increase) in inventories 15 (17,128) (20,255) (3,396)
Increase in trade and other payables 15,126 21,527 3,037
(Decrease) / increase in provisions 17 (29) (82) 429
Cash inflows from operating activities 7,711 5,535 33,943
Corporation tax paid (465) (457) (466)
Net cash from operating activities 7,246 5,078 33,477
Cash flows from investing activities
Acquisition of property, plant and equipment 13 (3,355) (1,985) (4,691)
Capital contributions received from landlords 13 441 516 842
Acquisition of intangible assets 12 (654) (702) (1,185)
Interest received 6 33 - 35
Net cash outflows from investing activities (3,535) (2,171) (4,999)
Cash flows from financing activities
Payment of finance lease liabilities (capital element) 14 (9,992) (10,402) (20,330)
Payment of finance lease liabilities (interest) 14 (2,234) (2,043) (4,101)
Other interest paid (773) (341) (579)
Proceeds from bank borrowings 9,000 9,000 9,000
Repayment of bank borrowings - - (9,000)
Purchase of treasury shares - (301) (524)
Net cash from financing activities (3,999) (4,087) (25,534)
Net decrease in cash and cash equivalents (288) (1,180) 2,944
Exchange rate movements (124) 83 (445)
Cash and cash equivalents at beginning of Period 4,118 1,619 1,619
Cash and cash equivalents at end of Period 3,706 522 4,118
Notes to the Unaudited Condensed Consolidated Interim Financial Statements
For the 26 weeks ended 02 November 2025
1 Accounting Policies
(a) General Information
TheWorks.co.uk plc ('the Company') is a public limited company domiciled in
the United Kingdom and its registered office is Boldmere House, Faraday
Avenue, Hams Hall Distribution Park, Coleshill, Birmingham, B46 1AL. These
unaudited condensed consolidated interim financial statements ('interim
financial statements') as at and for the 26 weeks ended 02 November 2025
comprise the results of the Company and its subsidiaries (together referred to
as 'the Group').
(b) Basis of preparation
The interim financial statements have been prepared in accordance with IAS 34
Interim Financial Reporting and should be read in conjunction with
TheWorks.co.uk plc financial statements for the 52 weeks ended 04 May 2025.
The interim financial statements do not include all of the information
required for a complete set of IFRS financial statements. However, selected
explanatory notes are included to explain events and transactions that are
significant to an understanding of the changes in the Group's financial
position and performance since the last annual financial statements.
The consolidated financial statements are presented in pounds sterling and all
values are rounded to the nearest thousand (£000), except when otherwise
indicated.
(i) Going concern
The unaudited condensed financial statements have been prepared on a going
concern basis, which the Directors consider appropriate for the reasons set
out below.
The Directors have assessed the prospects of the Group, taking into account
its current position and the potential impact of the principal risks which
have been identified through the Group's risk evaluation process.
In preparing its FY25 Annual Report and financial statements (which were
approved on 22 July 2025), the Group prepared a detailed strategic review and
produced a five-year plan to support the new strategy, 'Elevating The Works'.
The cash flow forecast prepared covers a period of at least 12 months from the
date of approval of these unaudited condensed financial statements (the going
concern assessment period), based on the Board's forecast for FY26 and its
5-year strategic plan, referred to as the 'Base Case' scenario. In addition, a
'severe but plausible' 'Downside Case' sensitivity was prepared to support the
Board's conclusion regarding going concern, by stress testing the Base Case to
indicate the financial headroom resulting from applying more pessimistic
assumptions.
In assessing the basis of preparation the Directors considered:
· The external environment.
· The Group's financial position including the quantum and
expectations regarding availability of bank facilities.
· The output of the Base Case scenario, which mirrors the Group's
five-year strategic plan and therefore represents its estimate of the most
likely financial performance over the forecast period.
· The potential impact on financial performance of the principal
risks, including if the operational challenges at the Group's third-party
online fulfilment provider were to continue.
· Measures to maintain or increase liquidity in the event of a
significant downturn in trading.
· The resilience of the Group to these risks having a more severe
impact, evaluated via the Downside Case which shows the impact on the Group's
cash flows, bank facility headroom and covenants.
Financial position and bank facilities
At the Period end the Group held net debt (excluding lease liabilities) of
£5.3m (HY25: £8.5m) (Note 16).
The Group's bank facilities comprise a £20.0m revolving credit facility (RCF)
which terminates at the end of November 2026. The Group is in discussions
regarding the renewal of the facility which it expects to conclude prior to
approval of the FY26 Annual report and accounts in July 2026. The current
facility includes two financial covenants which are structured in a way that
is typical for a retail business of this size and are tested quarterly:
1. The level of net debt to LTM (last twelve months') EBITDA must not
exceed 2.5 times during the life of the facility.
2. The "Fixed Charge Cover" or ratio of LTM EBITDA prior to deducting
rent and interest, until October 2025 the ratio was required to be at least
1.05 and thereafter it must be at least 1.20 times.
The Group expects to be able to operate and have sufficient headroom within
these covenants during the forecast period.
Potential impact of risks on financial scenarios
The 'Principal risks and uncertainties' section of the Strategic report on
pages 36 to 41 of the Group's FY25 Annual Report, sets out the main risks that
the Board considers relevant.
It is considered unlikely that all the risks would manifest themselves to
adversely affect the business at the same time. The Group's five-year
financial plan has been formed from the new strategy, 'Elevating The Works',
which has three strategic drivers which are underpinned by the strategic
initiatives and clear delivery plans. In delivering the strategy, the risks to
the business have been taken into consideration and where deemed to have a
financial implication these have been addressed through the strategic
initiatives.
The Downside Case scenario assumes that there are more severely negative
effects than the Base Case. In particular, the Downside Case assumptions are
that macroeconomic conditions are significantly worse, resulting in reduced
consumer spending and lower sales. It should be noted that the Base Case
already takes into account the current subdued consumer market conditions. The
Downside Case assumes that the Group's current sales growth does not continue
over the Christmas peak in FY26 financial year and assumes reduced sales
growth over the remaining three-year financial period.
Conclusion regarding basis of preparation
The current economic environment remains challenging with the impact being
felt by much of the UK particularly low-income households. There is sufficient
cash headroom and headroom within both covenants under both scenarios and
therefore the Directors are confident that the Group will have sufficient
funds to continue to meet its liabilities as they fall due for at least 12
months from the date of approval of the financial statements and have
therefore prepared the financial statements on a going concern basis.
(ii) Accounting policies
The interim financial statements have been prepared on a basis consistent with
the accounting policies published in the Group's financial statements for
FY25.
(c) Alternative performance measures and Adjusting items
In the reporting of financial information, the Group tracks a number of APMs
in managing its business. APMs should be considered in addition to IFRS
measurements. The Group's definitions of APMs may not be comparable with
similarly titled performance measures and disclosures by other entities.
The Group believes that these APMs, which are not considered to be a
substitute for or superior to IFRS measures, provide stakeholders with
additional helpful information on the performance of the business. They are
consistent with how the business performance is planned and reported
internally and are also consistent with how these measures have been reported
historically. Some of the APMs are also used for the purpose of setting
remuneration targets.
The APMs should be viewed as supplemental to, but not as a substitute for,
measures presented in the consolidated financial statements prepared in
accordance with IFRS. The Group believes that the APMs are useful indicators
of its performance but they may not be comparable with similarly titled
measures reported by other companies due to the possibility of differences in
the way they are calculated.
The key APMs that the Group uses include: like-for-like sales growth (LFL);
EBITDA, Pre-IFRS 16 Adjusted EBITDA, Adjusted profit after tax, Profit after
tax, Net debt; and Adjusted earnings per share. The APMs used by the Group and
explanations of how they are calculated and how they can be reconciled to a
statutory measure where relevant, are set out in Note 4.
"Adjusted" measures are calculated by adding back or deducting Adjusting
Items. Adjusting items are material in size and unusual in nature or incidence
and, in the judgement of the Directors, should therefore be disclosed
separately on the face of the financial statements to ensure that the reader
has a proper understanding of the Group's financial performance and that there
is comparability of financial performance between periods.
Refer to Note 5 for information regarding items that were treated as
Adjusting.
(d) Key sources of estimation uncertainty
The preparation of consolidated financial statements requires the Group to
make estimates and judgements that affect the application of policies and
reported amounts.
Critical judgements represent key decisions made by management in the
application of the Group's accounting policies. Where a significant risk of
materially different outcomes exists, this will represent a key source of
estimation uncertainty.
Estimates and judgements are based on historical experience and other factors,
including expectations of future events that are believed to be reasonable
under the circumstances. Actual results may differ from these estimates.
Key sources of estimation uncertainty which are material to the interim
financial statements are described in the context of the matters to which they
relate, in the following notes:
Description Note
Going concern 1
Impairment of intangible assets, property, plant and equipment and 12, 13, 14
right-of-use assets
2 Segmental reporting
IFRS 8 requires segment information to be presented on the same basis as is
used by the Chief Operating Decision Maker for assessing performance and
allocating resources.
The Group has one operating segment with two revenue streams, bricks and
mortar stores and online. This reflects the Group's management and reporting
structure as viewed by the Board of Directors, which is considered to be the
Group's Chief Operating Decision Maker. Aggregation is deemed appropriate due
to both operating segments having similar economic characteristics, similar
products on offer and a similar customer base.
3 Revenue
The Group's revenue is derived from the sale of finished goods to customers.
The following table shows the primary geographical markets from which revenue
is derived.
26 weeks ended 26 weeks ended 52 weeks ended
02 November 2025 03 November 2024 04 May 2025
£000 £000 £000
Sale of goods
- UK 121,589 122,127 272,122
- EU (Republic of Ireland) 2,254 2,073 4,917
Total revenues 123,843 124,200 277,039
Seasonality of operations
The Group's revenue is subject to seasonal fluctuations as a result of peaking
during the approach to Christmas, from October to December. Therefore, the
first half of the financial year, from April to October, typically produces
lower revenue and profit than the second half.
4 Alternative performance measures ("APMs")
Like-for-like ("LFL") sales
Closest IFRS equivalent: revenue
LFL sales are defined by the Group as the year-on-year growth in gross sales
from stores which have been trading for a full financial year prior to the
current year and have been trading throughout the current financial Period
being reported on, and from the Company's online store, calculated on a
calendar week basis. The measure is used widely in the retail industry as an
indicator of sales performance. LFL sales are calculated on a gross basis to
ensure that fluctuations in the VAT rates of products sold are excluded from
the LFL sales growth percentage figure.
EBITDA and pre-IFRS 16 Adjusted EBITDA
Closest IFRS equivalent: operating profit(1)
EBITDA is earnings before interest, tax, profit or loss on disposal of fixed
assets, depreciation, amortisation and impairment reversals and charges. The
Group uses EBITDA as a measure of trading performance, as it usually
correlates with the Group's operating cash generation.
Pre-IFRS 16 Adjusted EBITDA is defined by the Group as pre-IFRS 16 earnings
before interest, tax, depreciation, amortisation and profit/loss on the
disposal of fixed assets, after adding back or deducting Adjusting items.
Pre-IFRS 16 EBITDA is used for the bank facility financial covenants.
The table below provides a reconciliation of operating profit to Adjusted
EBITDA and pre-IFRS 16 EBITDA:
26 weeks ended 26 weeks ended 52 weeks ended
02 November 2025 03 November 2024 04 May 2025
£000
£000 £000
Operating profit(1) (2,746) (4,422) 13,098
Add back:
Depreciation of property, plant and equipment 1,910 1,399 3,854
Depreciation of right-of-use assets 10,662 10,203 18,385
Amortisation 568 390 1,213
Loss on disposal of fixed assets 37 492 282
Gain on modification of right-of-use assets (62) (320) (193)
Adjusting items 489 316 (3,768)
Adjusted EBITDA 10,858 8,058 32,871
Less:
Income statement rental charges not recognised under IFRS 16 (11,951) (10,809) (23,328)
Foreign exchange difference on Euro leases 51 (10) (36)
Pre-IFRS 16 Adjusted EBITDA (1,042) (2,761) 9,507
(1 Whilst operating profit is not defined formally in IFRS, it is considered a
generally accepted accounting measure.)
Adjusted profit after tax
Closest IFRS equivalent: profit before tax
Adjusted PBT is profit before tax adjusted to exclude the effect of
transactions that, in the opinion of the Directors, are either one off in
nature and/or are unreflective of the underlying trading performance of the
Group in the Period. Adjusted PBT reports a normalised or underlying trading
performance of the Group. The transactions that have been adjusted could
distort the impression of future performance trends based on the current year
results.
The Group uses Adjusted PBT to assess its performance on an underlying basis
excluding these items and believes measures adjusted in this manner provide
additional information about the impact of unusual or one-off items on the
Group's performance in the Period.
These adjusted metrics are included within the consolidated income statement
and consolidated statement of other comprehensive income, with further details
of Adjusting items included in Note 5.
26 weeks ended 26 weeks ended 52 weeks ended
02 November 2025 03 November 2024 04 May 2025
£000
£000 £000
Adjusted (loss)/profit after tax (4,937) (5,902) 4,410
Adjusting items (including impairment charges and reversals) (489) (316) 3,768
Profit after tax (5,426) (6,218) 8,178
Financial position APMs
Net debt
Closest IFRS equivalent: no equivalent; however it is calculated by combining
IFRS measures for cash and borrowing.
Net debt is calculated by subtracting the Group's cash and cash equivalents
from its gross borrowing. Net debt is utilised in the calculation of leverage,
a covenant in the Group's financing facilities.
The Group presents net debt inclusive and exclusive of lease liabilities,
which is consistent with the definition used for its banking covenant
calculations.
Calculation of net debt 26 weeks ended 26 weeks ended 52 weeks ended
02 November 2025 03 November 2024 04 May 2025
£000
£000 £000
Current borrowings (27,284) (29,580) (18,646)
Non-current borrowings (59,604) (58,716) (56,284)
Gross borrowings (86,888) (88,296) (74,930)
Add cash 3,706 522 4,118
Net debt (inc. leases) (83,182) (87,774) (70,812)
Lease liabilities 77,888 79,296 74,930
Net (debt)/ cash (exc. leases) (5,294) (8,478) 4,118
5 Adjusting items
During the Period, the items analysed below have been classified as Adjusting:
26 weeks ended 02 November 2025 26 weeks ended 52 weeks ended
03 November 2024 04 May 2025
£000 £000 £000
Cost of sales
Impairment charges - - (2,784)
Impairment reversals - - 9,253
Profit/ (loss) on disposal of right-of-use assets and lease liabilities 8 358 (845)
Exceptional fulfilment costs - (426) (1,216)
Transition costs related to online sales Distribution Centre (497) - -
Other exceptional items - (248) -
Administration costs
Other exceptional costs - restructuring - - (640)
Total Adjusting items before tax (489) (316) 3,768
Transition costs of £0.5m related to the move to a new third-party provider
in the Period.
For the 26 weeks ended 03 November 2024: Exceptional fulfilment costs of
£0.4m related to non-recurring operational costs as a result of issues at our
online third-party fulfilment centre. Other exceptional costs comprised
£0.1m of redundancy costs and £0.1m related to the settlement of a legal
case.
For the 52 weeks ended 04 May 2025: £1.2m in relation to exceptional
fulfilment costs at the third-party fulfilment centre over peak and £0.6m
related to the review of the cost base of the Group, which included £0.4m of
redundancy costs.)
Impairment charges and Impairment reversals relate to property, plant and
equipment, intangible assets and right-of-use assets (see Notes 12, 13, 14).
No impairment has been recognised in the Period.
Profit on disposal of right-of-use assets and lease liabilities relate to
leases (see Note 14).
6 Finance income and expense
26 weeks ended 02 November 2025 26 weeks ended 52 weeks ended
03 November 2024 04 May 2025
£000 £000 £000
Finance income
Bank interest receivable 33 - 35
Total finance income 33 - 35
Finance expense
Bank interest payable (550) (310) (535)
Amortisation of capitalised loan costs (89) (78) (154)
Interest payable on lease liabilities (2,234) (2,043) (4,101)
Total finance expense (2,873) (2,431) (4,790)
Net financing expense (2,840) (2,431) (4,755)
7 Share based payments
During the Period, 2,249,020 shares were awarded under "TheWorks.co.uk 2018
Long Term Incentive Plan" and nil awarded under the Save As You Earn Scheme.
(26 weeks ended 03 November 2024: nil and nil, 52 weeks ended 04 May 2025:
2,454,187 and nil respectively).
During the Period, 40,000 restricted stock awards were granted to key
management and senior employees (26 weeks ended 03 November 2024: nil, 52
weeks ended 04 May 2025: 102,500).
Expense recognised in the income statement
The IFRS 2 charge recognised during the Period was as follows:
26 weeks ended 26 weeks ended 52 weeks ended
02 November 2025 03 November 2024 04 May 2025
£000 £000 £000
LTIP -- Share based payment expense 189 79 214
RSA - Share based payment expense 27 82 128
SAYE - Share based payment expense 1 27 11
Total IFRS 2 charges 217 188 353
8 Employee benefits
The Group operates a defined contribution pension scheme. The pension charge
for the Period represents contributions payable by the group to the scheme and
amounted to £599k (26 weeks ended 03 November 2024: £565k; 52 weeks ended 04
May 2025: £1,125k).
9 Tax
The income tax expense or credit is determined by multiplying the loss before
tax for the interim reporting Period by management's best estimate of the
weighted average annual income tax rate expected for the full financial year,
adjusted for the tax effect of certain items recognised in full in the interim
Period. As such, the effective tax rate in the interim financial statements
may differ from management's estimate of the effective tax rate for the annual
financial statements.
The Group's total income tax credit in respect of the Period was £160k (26
weeks ended 03 November 2024 credit: £635k, 52 weeks ended 04 May 2025 tax
charge: £165k). The effective tax rate on the total loss before tax was 2.9%
(26 weeks ended 03 November 2024: 9.3%; 52 weeks ended 04 May 2025: effective
tax rate on total profit before tax was 2.0%), the Adjusted tax rate was 3.1%
(26 weeks ended 03 November 2024: 9.7%, 52 weeks ended 04 May 2025: 3.6%).
The difference between the total effective tax rate and the Adjusted tax rate
relates to certain costs and depreciation charges (including impairment) being
non-deductible for tax purposes.
The effective tax rate of 2.9% differs from the UK corporation tax rate of 25%
principally due to the impact of adjustments for deferred tax, non-deductible
expenditure such as those related to share-based payment and depreciation
charges, and the difference in the tax rate applied to other jurisdictions.
10 Earnings per share
Basic earnings per share is calculated by dividing the profit or loss for the
Period attributable to ordinary shareholders by the weighted average number of
ordinary shares in issue during the Period.
Diluted earnings per share uses the weighted average number of shares in issue
for the Period, adjusted for the dilutive effect of potential ordinary shares.
Potential ordinary shares represent employee share incentive awards. In the
event that there are losses per share, diluted EPS is deemed to be the same as
Basic EPS.
The Group has chosen to present an Adjusted earnings per share measure, with
profit adjusted for Adjusting items (see Note 5 for further details) to
reflect the Group's underlying (loss) / profit for the Period.
02 November 2025 03 November 2024 04 May 2025
Number Number Number
Number of shares in issue 62,500,000 62,500,000 62,500,000
Number of dilutive share options (nil in the event of a loss) - - -
Number of shares for diluted earnings per share 62,500,000 62,500,000 62,500,000
£000 £000 £000
(Loss) / profit for the financial Period (5,426) (6,218) 8,178
Adjusting items 489 316 (3,768)
Total Adjusted (loss) / profit for Adjusted earnings per share (4,937) (5,902) 4,410
Pence Pence Pence
Basic (loss) / earnings per share (8.7) (9.9) 13.1
Diluted (loss) / earnings per share (8.7) (9.9) 13.1
Adjusted basic (loss) / earnings per share (7.9) (9.4) 7.1
Adjusted diluted (loss) / earnings per share (7.9) (9.4) 7.1
11 Dividends
The Board has not declared a dividend in respect of FY26 interim results
(FY25: nil).
12 Intangible assets
Goodwill Software Total
£000 £000 £000
Cost
Balance at 04 May 2025 16,180 10,934 27,114
Additions - 654 654
Disposals - (249) (249)
Balance at 02 November 2025 16,180 11,339 27,519
Amortisation / Impairment
Balance at 04 May 2025 16,180 8,766 24,946
Amortisation charge - 568 568
Disposals - (249) (249)
Balance at 02 November 2025 16,180 9,085 25,265
Net book value
At 04 May 2025 - 2,168 2,168
At 02 November 2025 - 2,254 2,254
13 Property, plant and equipment
Leasehold Plant & Fixtures &
improvements equipment fittings Total
£000 £000 £000 £000
Cost
Balance at 04 May 2025 4,163 3,946 17,338 25,447
Additions 849 353 1,712 2,914
Disposals (239) (119) (1,099) (1,457)
Balance at 02 November 2025 4,773 4,180 17,951 26,904
Depreciation and impairment
Balance at 04 May 2025 2,818 3,584 6,462 12,864
Depreciation charge 254 296 1,360 1,910
Disposals (214) (119) (1,087) (1,420)
Balance at 02 November 2025 2,858 3,761 6,735 13,354
Net book value
At 04 May 2025 1,345 362 10,876 12,583
At 02 November 2025 1,915 419 11,216 13,550
Impairment of tangible and intangible assets
The carrying amounts of the Group's tangible and intangible assets with a
measurable useful life are reviewed at each balance sheet date if events or
circumstances indicate that the full carrying value may not be recoverable to
determine whether there is any indication of impairment to their value. If
such an indication exists, the asset's recoverable amount is estimated and
compared to its carrying value. Where the asset does not generate cash flows
that are independent from other assets, the Group estimates the recoverable
amount of the CGU to which the asset belongs. The Directors consider an
individual retail store to be a cash generating unit (CGU), as well as the
Company's website.
The recoverable amount of an asset is the greater of its fair value less
disposal cost and its value in use (the present value of the future cash flows
that the asset is expected to generate). In determining value in use, the
present value of future cash flows is discounted using a discount rate that
reflects current market assessments of the time value of money in relation to
the period of the investment and the risks specific to the asset concerned.
The carrying value represents each CGU's specific assets, as well as the IFRS
16 right-of-use asset, plus an allocation of corporate assets where these
assets can be allocated on a reasonable and consistent basis.
Where the carrying value exceeds the recoverable amount an impairment loss is
established with a charge being made to the income statement. When the reasons
for a write down no longer exist, the write down is reversed in the income
statement up to the net book value that the relevant asset would have had if
it had not been written down and if it had been depreciated.
An impairment review across all CGU's was conducted for the 52 weeks to 04 May
2025 for the Annual Report and Accounts signed on 22 July 2025. The Directors
have reviewed the events and circumstances since 04 May 2025, along with the
Group's Base Case plan and do not consider it to have changed materially since
the impairment review was completed as at 04 May 2025. Therefore, the
Directors have concluded that no impairment trigger has occurred in relation
to the store CGU's. In line with the assessment completed in the period to 04
May 2025, the Group's trading website has been reviewed for impairment,
however, as the website CGU is fully impaired, no further impairment charge is
recognised for the 26 weeks ended 03 November 2025.
No impairment charge or reversal was recognised for the 26 weeks ended 02
November 2025 or the 26 weeks ended 03 November 2024. An impairment charge of
£2,612k was recognised for the 52 weeks ended 04 May 2025 against 87 stores
with a recoverable amount of £13,115k, and an impairment charge of £nil was
recognised against the trading website. An impairment reversal of £8,582k was
recognised for the 52 weeks ended 04 May 2025 relating to 253 stores with a
recoverable amount of £72,408k, and an impairment reversal of £498k was
recognised against the trading website. In line with the previously adopted
treatment, impairment charges and reversals have been shown as Adjusting
items.
14 Leases
Amounts recognised in the statement of financial position
Right-of-use assets
Land and buildings Plant and equipment
£000 £000 Total
£000
02 November 2025
At 04 May 2025 61,449 381 61,830
Depreciation charge for the year (10,594) (68) (10,662)
Additions to right-of-use assets 3,059 - 3,059
Effect of modifications to right-of-use assets 10,110 - 10,110
Derecognition of right-of-use assets (198) - (198)
At 02 November 2025 63,826 313 64,139
Lease liabilities
Land and buildings Plant and equipment
£000 £000 Total
£000
02 November 2025
At 04 May 2025 74,545 385 74,930
Additions to lease liabilities 3,143 - 3,143
Interest expense 2,225 9 2,234
Effect of modifications to lease liabilities 9,964 - 9,964
Lease payments (12,152) (74) (12,226)
Disposals of lease liabilities (208) - (208)
Foreign exchange movements 51 - 51
At 02 November 2025 77,568 320 77,888
Carrying value of leases included in the consolidated statement of financial
position
As at 02 November 2025 As at 04 May 2025
Current 18,284 18,646
Non-current 59,604 56,284
At 02 November 2025 77,888 74,930
15 Inventory
02 November 2025 03 November 2024 04 May 2025
£000 £000 £000
Goods for resale 46,852 42,859 30,121
Less: stock provisions for shrinkage and obsolescence (3,300) (2,450) (1,061)
Goods for resale net of provisions 43,552 40,409 29,060
Stock in transit 8,561 11,312 5,925
Inventory 52,113 51,721 34,985
A provision of £3.3m for stock obsolescence and shrinkage is included in the
balance sheet at the Period end (03 November 2024: £2.5m, 04 May 2025:
£1.1m). The provision is an estimate, which is based on stock ageing and
historical trends and is reviewed by management during the year.
16 Borrowings and cash
02 November 2025 03 November 2024 04 May 2025
£000 £000 £000
Non-current liabilities
Lease liabilities 59,604 58,716 56,284
Non-current liabilities 59,604 58,716 56,284
Current liabilities
Revolving credit facility (RCF) 9,000 9,000 -
Lease liabilities 18,284 20,580 18,646
Current liabilities 27,284 29,580 18,646
The Group's bank facilities comprise an RCF of £20.0m expiring 30 November
2026. The facility includes financial covenants in relation to the level of
net debt to LTM EBITDA and 'Fixed Charge Cover' or ratio of LTM EBITDA prior
to deducting rent and interest, to LTM rent and interest.
None of the Group's cash and cash equivalents (FY24: £Nil) is held by the
trustee of the Group's employee benefit trust in relation to the share schemes
for employees.
Net debt reconciliation
02 November 2025 03 November 2024 04 May 2025
£000 £000 £000
Net debt (excluding unamortised debt costs)
RCF 9,000 9,000 -
Cash and cash equivalents (3,706) (522) (4,118)
Net debt / (cash) at bank 5,294 8,478 (4,118)
Non IFRS 16 lease liabilities - 11 -
Non IFRS 16 net debt / (cash) 5,294 8,489 (4,118)
IFRS 16 lease liabilities 77,888 79,296 74,930
Net debt including IFRS 16 lease liabilities 83,182 87,785 70,812
17 Provisions
Property provision
A dilapidation provision is recognised when there is a future obligation
relating to the maintenance of leasehold property. The provision is based on
management's best estimate of the obligation which forms part of the Group's
unavoidable cost of meeting its obligations under the lease contracts. Key
uncertainties are estimates of amounts due.
Total
£000
Balance at 04 May 2025 1,448
Provisions made during the Period 212
Provisions used during the Period (41)
Provisions released during the Period (200)
Balance as at 02 November 2025 1,419
Maturity analysis of cash flows:
Total
£000
Due in less than one year 686
Due between one and five years 359
Due in more than five years 374
Total 1,419
18 Share Capital
02 November 2025 03 November 2024 04 May 2025
£'000s £'000s £'000s
Share capital
At 02 November 2025, 03 November 2024 and 04 May 2025 625 625 625
Share premium
At 02 November 2025, 03 November 2024 and 04 May 2025 28,322 28,322 28,322
19 Financial Instruments
The following table details the Group's expected maturities for its financial
liabilities based on the undiscounted contractual maturities of the financial
liabilities, including interest that will be payable.
Within 1 year 2-5 years 5+ years Total
Contractual maturity of financial liabilities £000 £000 £000 £000
02 November 2025
Non Derivative
Interest bearing (9,000) - - (9,000)
Non-interest bearing 43,547 359 374 44,280
Undiscounted lease liabilities 22,525 53,044 17,027 92,596
Derivative
Forward currency contracts 701 - - 701
57,773 53,403 17,401 128,577
03 November 2024
Non Derivative
Interest bearing 9,000 - - 9,000
Non-interest bearing 46,966 634 - 47,600
Undiscounted lease liabilities 23,753 51,165 16,953 91,871
Derivative
Forward currency contracts 605 - - 605
80,324 51,799 16,953 149,076
04 May 2025
Non Derivative
Interest bearing - - - -
Non-interest bearing 29,387 309 342 30,038
Undiscounted lease liabilities 22,375 48,243 17,325 87,943
Derivative
Forward currency contracts 1,879 - - 1,879
53,641 48,552 17,667 119,860
Fair value measurements
Financial instruments carried at fair value are measured by reference to the
following fair value hierarchy, based on the extent to which the fair value is
observable;
· Level 1 fair value measurements are derived from quoted prices
(unadjusted) in active markets for identical assets or liabilities;
· Level 2 fair value measurements are derived from inputs other
than quoted prices included within Level 1 that are observable for the asset
or liability, either directly (i.e. as prices) or indirectly (i.e. derived
from prices); and
· Level 3 fair value measurements are those derived from valuation
techniques that include inputs for the asset or liability that are not based
on observable market data (unobservable inputs).
Derivative financial instruments are carried at fair value under a Level 2
valuation method. All other financial instruments carried at fair value are
measured using the Level 1 valuation method.
There were no transfers between the levels during the current or prior Period.
Derivative Financial Instruments
The fair value of derivative financial instruments at the Balance Sheet date
is as follows:
02 November 2025 03 November 2024 04 May
2025
£000 £000 £000
Net Derivative Financial Instruments
Foreign exchange contracts (503) (515) (1,879)
Classification of financial instruments
The tables below show the classification of financial assets and liabilities
as at 02 November 2025. The fair values of financial instruments have been
assessed to be approximately equivalent to their carrying values.
Financial
Cash flow assets at Other
hedging amortised financial
instruments cost liabilities
£000 £000 £000
Financial assets measured at fair value
Derivative financial instruments 198 - -
Financial assets not measured at fair value
Trade and other receivables - 7,210 -
Cash and cash equivalents - 3,706 -
Financial liabilities measured at fair value
Derivative financial instruments (701) - -
Financial liabilities not measured at fair value
Unsecured bank loans - - (9,000)
Lease liabilities - - (77,888)
Trade and other payables - - (47,977)
As at 02 November 2025 (503) 10,916 (134,865)
Financial
Cash flow assets at Other
hedging amortised financial
instruments cost liabilities
£000 £000 £000
Financial assets measured at fair value
Derivative financial instruments 90 - -
Financial assets not measured at fair value
Trade and other receivables - 11,980 -
Cash and cash equivalents - 522 -
Financial liabilities not measured at fair value
Unsecured bank loans (605) - (9,000)
Lease liabilities (79,296)
Trade and other payables - - (51,712)
As at 03 November 2024 (515) 12,502 (140,008)
Cash flow Financial Other
hedging assets at Financial
instruments amortised cost Liabilities
£000 £000 £000
Financial assets measured at fair value
Derivative financial instruments - - -
Financial assets not measured at fair value
Trade and other receivables - 6,149 -
Cash and cash equivalents - 4,118 -
Financial liabilities measured at fair value
Derivative financial instruments (1,879) - -
Financial liabilities not measured at fair value
Lease liabilities - - (74,930)
Trade and other payables - - (32,851)
As at 04 May 2025 (1,879) 10,267 (107,781)
20 Related parties
Identity of related parties with which the Group has transacted
Balances and transactions between the Company and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not disclosed
in this note. There were no transactions with related parties who are not
members of the Group during the financial Period.
21 Contingent liabilities
HMRC enquiry regarding corporation tax
In March 2024, the Group submitted overpayment relief claims to HMRC. The
adjustments to the previously filed positions arose as a result of prior year
adjustments booked in the FY23 and FY24 financial statements of The Works
Stores Limited, which increased the amount of trading losses in those years.
HMRC has challenged the validity of these claims. The Group, supported by
external advisers, believes its position is robust and expects the matter to
be resolved in its favour. The liability should HMRC not accept the
overpayment relief claims will result in the current tax debtor of £1.7m
becoming a liability in the range of £1.6m to £2.8m, with a corresponding
adjustment to profit after tax. No provision has been made as the likelihood
of an outflow of economic resources is not considered probable.
The Group has no other contingent liabilities.
Principal risks and uncertainties
There are a number of risks and uncertainties which could have a material
negative impact on the Group's performance over the remainder of the current
financial year. These could cause actual results to differ materially from
historical or expected results. The Board does not believe that these risks
and uncertainties are materially different to those published in the Group's
Annual Report for the Period ended 04 May 2025.
These risks are associated with:
1. Economy and market
2. Design and execution of strategy
3. Supply chain
4. IT systems and cyber security
5. Brand and reputation
6. Seasonality of sales
7. People
8. Environmental (including climate change)
9. Regulation and compliance
10. Liquidity
11. Business continuity
Detailed explanations of these risks are set out on pages 36 to 41 of the FY25
Annual Report which is available at
https://corporate.theworks.co.uk/application/files/9017/5749/6485/TheWorks.co.uk-plc-Annual-Report-and-Account-2025.pdf
(https://corporate.theworks.co.uk/application/files/9017/5749/6485/TheWorks.co.uk-plc-Annual-Report-and-Account-2025.pdf)
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