The Works shares soar as families look for ‘screen-free’ fun
Shares in The Works soared on Thursday morning after the retailer said growing demand for “screen-free” entertainment is driving up revenue.
The Aim-listed stock jumped 11 per cent on early trading, to 60p, after it reported revenue growth of more than three per cent to £260m in the year to May.
The retailer saw like-for-like sales jump three per cent – outperforming the 0.1 per cent sales contraction recorded in that time across non-food goods in the UK, according to British Retail Consortium data.
The Works chief executive Gavin Peck said its appeal is “aligned to families’ growing demand for affordable screen-free activities”.
The retailer’s “outperformance” against the broader high street shows the firm “is increasingly relevant” and poised for further growth, Peck said.
The Works defies high street gloom
The firm said it is focusing on widening its margins by negotiating prices down with suppliers, controlling its stock more tightly and targeting promotional markdowns.
The retailer successfully delivered the £2m savings it had been hoping to make, and said this cost cutting has “partially offset” the inflationary pressures facing the retail industry.
The Works opened five new stores in the year to May, and currently operates 508 locations across the UK.
The retailer is defying wider industry trends, as wavering consumer confidence pushed retail footfall to a 10 per cent decline in April.
‘One of the most undervalued companies’
In March, shares in The Works jumped after the retailer announced it would close its website for sales with immediate effect and focus solely on its bricks and mortar stores.
The website now operates simply as a “shop window” to the brick and mortar stores, which already accounted for more than 90 per cent of sales.
Russ Mould, investment director at AJ Bell, said the move made financial sense for The Works. “It stocks low-ticket items that individually don’t lend themselves to being sold online as the postage costs are likely to be much greater than the actual product,” he said.
“The only way its web sales would ever thrive is if the customer bulk-bought items.”
Earlier this year, activist investor Kelso upped its stake in the firm, declaring it “one of the most undervalued companies on the UK stock market”.
The Works was forced to shut some of its shops following a ransomware cyber attack in 2022.