 A week flies by.
You sit there last week wondering what that update meant. The market wasn't sure initially with no activity on the day, but then they sold it down abit.
Now it has been bid back up to near the same mark.
When I read the update, when it hit the wire, just sat there thinking....there is something for both sides there. Is there enough to cause an initial movement? There just wasn't enough to tempt a buy so I have sat it out.
You can have Bears come on here and make their case. Bulls have their case as well...but in the grand scheme of things...it still has this feel about it...
This is from the other board...post 47..from a while back...
"....WRKS is just one of those types of shares that could be more suited to trading too.
It just has a natural gravitation to lurch up and down with the market not being convinced enough that profits can be sustained to attract anything more than this single digit multiple"
I don't know what the future holds, but that is what it has done with a downward bias due the current macro climate and all the worries over performance and cost increases to come.
Primark (ABF) cut their guidance from mid single-digit growth to low single-digit growth, and that guidance was given only in November. CARD comes battling back against doubters with a credible output and the market doesn't re-rate it - you actually have a shorter increasing a position. So the lower end of the spectrum is hard work, even if you believe it should be more resilient in these difficult times.
There is so much to say....
But the market is exchanging in size at 21p, so that's the value right now.
That's the market talking.
Exchanges are 1.6m without delayed prints.
IF the market gets behind the new strategy and believes those big numbers, then yeah there could be an imbalance to the upside. Maybe that is the swing factor amongst all the apprehension here.
So watching in to see if exchanges do pickup for a possible trade.
But a resounding stalemate between Bulls and Bears right now.
Leave it with the forum to throw in both sides.
All imo
DYOR |
 Figures mostly better than H1/2024 (though bigger debt, and poor online)
Much more including the numbers in the full release at
-------------------------------------------------------------------------------
Summary
·
H1 FY25 total revenue growth of 1.3% to £124.2m (H1 FY24: £122.6m) and total LFL (1) sales decline of 0.8%, which was in line with expectations and ahead of the wider non-food retail sector.(2)
o
Store LFL sales (over 90% of total sales) grew by 0.9%, driven by improved seasonal ranges and fiction book sales.
o
Online sales declined by 14.7%, impacted by a planned reduction in promotional activity and reduced capacity stemming from challenges at our third-party online fulfilment centre towards the end of the period.
·
Pre-IFRS 16 Adjusted EBITDA loss of £2.8m (H1 FY24: £8.5m loss) and adjusted loss before tax (3) of £6.5m (H1 FY24: Restated (4) £10.4m loss). (5) Significant year-on-year improvement driven by:
o
Action taken to grow product margins, up +220bps compared to H1 FY24.
o
Cost saving action over the last 12 months delivering tangible results.
·
The Group ended the Period with net debt (6) of £8.5m (H1 FY24: net debt £2.5m), reflecting higher levels of stock on water and the adverse impact of the different Period end date. (7)
·
Current trading for the 11 weeks ended 19 January 2025 is in line with expectations:
o
Resilient store performance, with LFL sales up 1%, supported by significant operational improvements across stores and in our retail Distribution Centre. Online sales declined by 14.9% YOY.
o
Strong end to Christmas trading continued into January.
·
Ongoing product margin growth and cost-saving action expected to deliver further benefits in remainder of this financial year and FY26, helping to offset significant cost headwinds.
·
On track to meet market expectations of pre-IFRS16 Adjusted EBITDA of £8.5m for FY25 and further profit growth in FY26.
·
New strategy announced - expect to transform the business and deliver sales in excess of £375m and an EBITDA margin of at least 6% within five years.
H1 FY25 strategic progress
Significant progress delivered in H1, with more targeted for H2:·
Completed project to define brand positioning more clearly, which is now reflected in our external marketing and includes rollout of new #TimeWellSpent strapline.·
Continued optimisation of store portfolio with three new openings, two relocations and eight closures. Operated from 506 stores at period end, of which 98% are trading profitably.·
Significant product margin growth as a result of negotiations with suppliers, conscious control of mix and reduced promotional activity.
Reduced cost base through improved ways of working at our retail Distribution Centre, which supported delivery of targeted annualised saving of at least £1m. Action taken in FY24 delivered further efficiencies in H1 FY25, including the removal of the customer loyalty scheme, restructuring of the Operating Board, implementation of a new store labour model and additional rent savings secured through negotiations with landlords.
New strategy
Having strengthened the Board in H1 we revisited our longer-term goals to ensure The Works has the right strategy to succeed over the long term and become the favourite destination for affordable, screen free activities for the whole family. We have now developed this strategy, 'Elevating The Works', which provides a clear plan to achieve those goals and drive a significant improvement in performance and shareholder returns. This strategy is underpinned by three strategic drivers:·
Growing Brand Fame·
Improving Customer Convenience
Being a Lean and Efficient Operator
We are confident that delivery of this strategy will have a transformative impact on the business and will enable us to deliver sales in excess of £375m and an EBITDA margin of at least 6% within five years.
Trading update
In the 11 weeks ended 19 January 2025, total LFL sales declined by 0.9%. The performance of our store estate, accounting for over 90% of sales, was resilient over the festive period, delivering LFL sales up 1.0%. We delivered a much-improved Christmas operationally across our stores, both store standards and customer service, and in our retail Distribution Centre. We saw particularly strong growth in Adult Fiction Books and good growth in our Christmas Accessories and Stationery ranges.
In contrast, our online performance was constrained over the festive period. Our third-party operated online fulfilment centre faced challenges fulfilling volumes during peak, which affected capacity and caused disruption for customers. We took timely and decisive action to control customer demand and protect profitability, however these unforeseen issues resulted in online LFLs declining 14.9%, which pulled our total LFL sales lower and created an additional circa £1m in exceptional fulfilment costs. We are currently investigating remedial actions and are considering our options for the future of our online offering and fulfilment.
Consumers remained cost-conscious, which resulted in high levels of promotional activity across the market in November and December. Whilst still providing customers with excellent value, we limited our promotional activity and maximised full-price sales in the run up to Christmas, helping to deliver a 190bps margin improvement year-on-year over the 11-week period.
Outlook
We saw a strong end to Christmas trading in December, which continued into January, and the online capacity issues experienced during peak trading have subsided. Our cash position also improved following Christmas, with £14.7m of cash as of 19 January 2025 and we expect to end the financial year with net cash of approximately £4m.
Consumer confidence is expected to remain fragile, however we are excited about the potential of new ranges landing in the Spring and expect to deliver modest sales growth for the remainder of the financial year.
We remain mindful of significant cost headwinds, including a circa £6.5m impact in FY26 due to the rise in National Living and Minimum Wages and changes to employers' National Insurance contributions. We will mitigate this through ongoing action to reduce costs and grow margins, including carefully targeted price increases. As a result, we are on track to deliver FY25 profits in line with compiled market forecasts (Pre-IFRS16 Adjusted EBITDA of £8.5m) and further profit growth in FY26.
With a new strategy in place and progress already underway, we are optimistic that we can deliver a significant improvement in performance and shareholder returns in the medium term.
Gavin Peck, Chief Executive Officer of The Works, commented:
"We started the financial year with a clear focus on reducing our cost base and growing margins in order to offset ongoing cost headwinds. We successfully delivered on these objectives in the first half of FY25 and are pleased to report a significant improvement in profitability year-on-year.
"We faced persistently difficult market conditions this Christmas but did not let this dampen our enthusiasm, instead focusing on the factors within our control. We delivered a resilient store performance and saw strong customer demand for our festive ranges, with our giant The Grinch soft toy standing out as a Christmas bestseller.
"Looking ahead, we are mindful of the need to navigate fragile consumer confidence and significant cost headwinds but believe there is much to be optimistic about at The Works. We expect that our action to grow revenue, increase margins and reduce costs will deliver improved results in the remainder of this financial year and in FY26. We have laid the foundations for our new strategy, which will transform the business and deliver a significant improvement in performance and shareholder returns in the years to come." |
Register for real-time alerts, custom portfolio, and market movers
Hot Features
Premium
