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

Works co ukAnnouncement

Thu 07:00

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RNS Number : 6756J  TheWorks.co.uk PLC  22 May 2025

22 May 2025

TheWorks.co.uk plc

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

Trading update for the 52 weeks ended 4 May 2025

FY25 and FY26 profit guidance upgraded; driven by strategic progress, strong
Q4 performance, sustained margin growth and ongoing operational efficiencies.

TheWorks.co.uk plc, the retailer of affordable, screen-free activities for the
whole family, announces a trading update for the 52 weeks ended 4 May 2025
(the "Period" or "FY25").

FY25 overview

The Works made significant financial and strategic progress in FY25 against a
challenging consumer backdrop.

 ·                             FY25 underlying performance was ahead of the wider non-food retail market
                               ((1)), with total LFL sales growth of 0.8%.
                               o                                         Stores, which comprise over 90% of sales, continued to drive this growth, with
                                                                         LFL sales up 2.3%. More customer-focussed events, new products across all key
                                                                         categories, improved store standards and product availability have been the
                                                                         key drivers of in-store growth.
                               o                                         Online sales declined by 12.1% due to the online fulfilment issues experienced
                                                                         during the festive period, as already announced, and our focus on driving
                                                                         profitable growth through this channel.
                               o                                         Delivered a strong performance post-Christmas, with Q4 total LFL sales growth
                                                                         of 6.4%, store LFL sales up 6.9% and online improving to flat sales.
 ·                             Total revenue was lower by 2.0% to £277m (FY24: £283m) due to:
                               o                                         The prior year benefitting from an additional trading week (53 weeks in FY24
                                                                         vs 52 weeks in FY25), which accounted for approximately half of the FY25
                                                                         reduction.
                               o                                         Optimisation of the store estate, with 7 new openings, 15 closures and 4
                                                                         relocations. We ended the year with a smaller, higher quality and more
                                                                         profitable portfolio of 503 stores (FY24: 511 stores).
 ·                             Sustained product margin growth (+200bps vs FY24), and decisive cost-saving
                               action delivered throughout the year, more than offset cost headwinds in FY25,
                               resulting in a significant improvement in profit.
 ·                             Pre-IFRS 16 Adjusted EBITDA ((2)) is now expected to be approximately £9.5m
                               for FY25 (FY24: £6m), which is ahead of market expectations ((3)).

 

Following the online fulfilment issues experienced during Christmas 2024 we
have appointed a new third-party provider. The transition is due to complete
by the autumn and is expected to deliver cost savings in FY26 and beyond as
well as providing a higher standard of service to customers.

Since the announcement of our new strategy, 'Elevating The Works', in January
2025, excellent initial progress has been made on our three strategic growth
drivers: growing our brand fame, improving customer convenience and being a
lean and efficient operator. A comprehensive update on our strategic progress
will be provided in the Preliminary results announcement.

Financial position

Strong cash generation through the year meant that we ended the Period with an
improved cash position of £4m at year end (FY24: £1.6m). The Works has an
RCF of £20.0m, which provides ample liquidity and is utilised to support the
build of stock prior to peak trading.

Board changes

Harry Morley has informed the Board of his intention to step down as Senior
Independent Non-Executive Director and will not seek re-election at the
forthcoming Annual General Meeting on 9 September 2025. After seven years of
valuable contribution to The Works, Harry's transition forms part of the
Board's succession plans and a recruitment process to identify his successor
is underway.

Outlook

The Board expects that the positive momentum seen since Christmas will
continue. This, combined with ongoing focus on product margin growth, cost
management and execution of our new strategy, means we expect to offset
significant cost headwinds and deliver profit growth in the year ahead ((4)).
As a result, we are targeting profit growth in excess of current market
expectations in FY26 ((3)).

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

"We are pleased to have made such significant progress in FY25, both
strategically and financially, particularly given the challenging retail
backdrop. Our sustained efforts to reduce costs and grow product margins,
together with the strong sales growth post-Christmas, means we delivered
profits ahead of expectations in FY25.

"Execution of our new strategy, 'Elevating The Works', is already delivering
tangible results. As ever, we've got more work to do, but everyone at The
Works is focused on fulfilling our ambition to become the favourite
destination for affordable, screen-free activities for the whole family. We
are confident that this, coupled with the strong momentum in our trading
performance, will see us deliver further profit growth in FY26."

Publication of FY25 results

The Works' FY25 Preliminary results are expected to be announced on Tuesday 22
July 2025.

This announcement contains inside information for the purposes of the retained
UK version of the EU Market Abuse Regulation (EU) 596/2014 ("UK MAR").

 

 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

 Jalini Kalaravy
 Sanctuary Counsel

 Ben Ullmann                                0207 340 0395

 Rachel Miller                              theworks@sanctuarycounsel.com (mailto:theworks@sanctuarycounsel.com)

 Kitty Ryder

Footnotes:

 1.  Data from the British Retail Consortium (BRC) showed non-food retail LFL
     decline of 0.1% for the 52-week period.
 2.  Pre-IFRS 16 Adjusted EBITDA excludes Adjusting items in relation to
     exceptional fulfilment costs (£1.2m) and exceptional restructuring costs
     (£0.6m).
 3.  Group compiled market forecasts for FY25 and FY26 are currently pre-IFRS16
     Adjusted EBITDA of £8.5m and £10m respectively.
 4.  Cost headwinds in FY26 include a circa £6m impact due to the rise in
     National Living and Minimum Wages and changes to employers' National Insurance
     contributions.

 

 

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