Following today’s release of The Works’ figures for H1 & Christmas FY2021/22; Georgina Sreeves, retail analyst at GlobalData, a leading data and analytics company, offers her view: “The pandemic has encouraged consumers to explore new hobbies, including arts and crafts, and The Works’ strong performance in its financial year so far reflects this heightened demand. But these positive results are also in part due to The Works’ ‘better, not just bigger’ strategy which has seen the retailer increase its branded offer. The record Christmas has prompted The Works to upgrade its profit expectations for the full year.
“Like-for-like (l-f-l) sales increased 9.0% on a two-year basis in the 11-week period ending 16 January 2022 as an improved product offer with front-list books, branded board games, and the expansion of well-known names such as Peppa Pig in its kids zone drove growth. Store l-f-ls grew 0.6% and online by 71.9% on a two-year basis, signifying that The Works has held on to the gains it made online during the height of the pandemic. This can be attributed not only to consumers’ shift online, but also The Works’ continued efforts to drive digital growth.
“Early preparation meant that The Works had ‘adequate’ stock during its golden quarter, though some items arrived later than expected. Continued supply-chain challenges have led the retailer to double down its efforts in this area by investing in its supply-chain team and systems.
“The Works proved itself a key destination for children’s activity products in its H1 ending 31 October 2021 as sales increased 17.9% on a two-year basis. Temporary store closures amid three national lockdowns caused total sales to drop 19.7% last year, so the retailer will be encouraged by a like-for-like sales rise of 14.5% this H1. The Works expects that its strong trading performance will more than offset the higher freight costs it has incurred, and forecasts adjusted EBITDA for FY2021/22 to be c.£15m.
“The Works is wisely focusing on improving its existing store estate through space management and improving merchandising and ranges. The retailer plans to introduce self-service tills to its stores in 2022 which will give it an edge over competitors Smyths and The Entertainer. The Works is also investing in automation for parts of its online-fulfilment operations, and is experimenting with direct-from-store delivery in 29 stores. This decision is well supported by its online performance; l-f-l online sales increased 80.7% on a two-year basis in its H1.”