Stationery chain The Works has slashed its guidance for the 2023 financial year and warned about consumer spending amid the Christmas spending period.
The London-listed company, which sells discount books, toys and art supplies, said the general market outlook had “deteriorated” since the start of the calendar year, pointing to “low consumer confidence and rising inflation.”
It was not clear how long such torrid conditions would continue, with “a heightened degree of uncertainty about how consumers will behave,” especially this Christmas, the firm’s “most important trading period.”
Shares in the firm had tumbled by more than 21 per cent on Monday afternoon, following a trading update.
While The Works anticipated it would be able to grow sales in the remainder of the year, it said it was uncertain whether the level of growth would “be in line with original expectations.”
It acknowledged headwinds, including “historically high freight costs, which are showing little sign of abating in the short term” as well as boosts to wage costs.
Online sales had been impacted by shoppers returning to physical stores post-lockdown, as well as the cost of living crisis, The Works said in a trading update for the first quarter ending 31 July.
Like-for-like sales sank 2.5 per cent, consisting of store growth of 1.4 per cent while online sales dipped 28.6 per cent.
It said underlying EBITDA for the 2022 financial year was now expected to be higher, at around £16.5m.
“Since the start of the financial year we have faced the residual effects of the cyber security incident and increasingly challenging trading conditions,” Gavin Peck, chief executive officer of The Works, said.
He added: “The progressive recovery of store trading throughout the period is reassuring and we are pleased with the resilient performance delivered considering the lower consumer confidence.”