Following the release of The Works’ figures for the 26 weeks ending 29th October 2023; Oliver Maddison, retail analyst at GlobalData, a leading data and analytics company, offers his view: “The Works has lowered its profit guidance, scaling back its adjusted EBITDA expectations for FY2023/24 to £6.0m, down from £10.0m, in the face of uncertain economic conditions and a modest sales performance in H1 as growth was driven by promotions. The discount retailer nonetheless outperformed fellow bookseller and stationer, WH Smith’s 0.8% contraction in high street revenue for the year ending 31 August, with The Works seeing its total sales rise by 3.4% — although like-for-like revenue growth was more muted at 1.6%.
“The retailer identified poor macroeconomic conditions and bad weather as inhibitors to its performance, particularly in October, but these should be conditions under which a discounter that specialises in indoor activities like arts and crafts thrives. To an extent, the inability to fully capitalise on such conditions is self-inflicted; whilst footfall was indeed limited by poor weather conditions, this should have been a boon for online sales. The Works did see this increase in October, but online sales still fell by a worrying 12.2% in H1, compounding on last year’s double-digit decline. The failure to properly address its relatively difficult to navigate website has meant that its online proposition has continued to lose traction with consumers, despite its potentially engaging offering including online-exclusive items and a ‘BookTok’ collection to entice younger readers, in keeping with the actions of rival booksellers like Waterstones, WH Smith, and Amazon.
“Incoming CFO, Rosie Fordham has a significant job ahead of her; the retailer hopes to ameliorate what it anticipates to be relatively soft consumer demand by enacting more promotions to entice shoppers back, which is a significant driver of its lowered EBITDA expectations. To ensure success over the key festive period, the Works should promote its arts and crafts supplies for making gifts to help consumers save money on their Christmas shopping.”