The Works, a high street arts and crafts retailer, is facing challenging times with a significant slump in profits due to weakened consumer demand. Despite these setbacks, strategic cost-saving measures and improved trading towards the end of the financial year provided a much-needed boost.
- The company’s adjusted earnings before interest, tax, depreciation, and amortization fell by 30% to £6m, showing a notable decline from the previous year.
- Store sales driven by physical outlets saw a slight growth, while online sales dropped significantly, impacting overall performance.
- Even with lower-than-expected sales figures, the company remained optimistic, focusing on transformation and strategic progress for future success.
- The Works looks ahead to the new financial year with confidence, aiming to bolster profitability amidst persistent economic challenges.
In 2024, The Works, a prominent arts and crafts retailer, experienced a notable downturn in profit margins, largely attributed to a 30% drop in adjusted pretax earnings. This financial dip, reducing profits to £3.2m from £5.3m the previous year, underscores the broader market difficulties faced amidst a tepid consumer environment and escalating living costs.
Revenue figures told a dual story of modest success and looming challenges. An overall revenue increment to £282.6m marked a 0.9% growth; however, this was overshadowed by a stark contrast between in-store and online sales. Physical stores, contributing to around 90% of the revenue, managed to maintain slight growth with a 0.6% like-for-like increase. Conversely, online sales fell significantly, with a decline of 12.4%, contributing to an overall 0.9% drop in sales.
Acknowledging the hurdles, The Works tied the underperformance to a ‘tough trading environment’ amplified by Christmas sales that fell below expectations. Despite these obstacles, the company’s late-year improvements and strategic financial measures helped in aligning final results with market expectations.
Looking forward, The Works reported a promising start to the 2025 financial year. Within the first 21 weeks, sales aligned with targets, showing a modest 0.2% rise in like-for-like performance. As the Christmas period approaches, there is an expressed assurance in their market positioning and operational readiness.
CEO Gavin Peck articulated optimism and resilience, highlighting the company’s strategic gains and readiness to combat persistent economic pressures while transforming operations for better shareholder returns. The Works targets to achieve an EBITDA margin of 5%, validating their focus on long-term profitability.
The Works demonstrates resilience with strategic measures to offset consumer demand challenges and aims for growth in 2025.
