Discount arts-and-craft retailer TheWorks.co.uk has warned that profit will miss expectations this year, sending shares plummeting roughly 40 per cent this morning.
The value business has reported a 1.9 per cent drop in like-for-like sales, which it said reflected a “difficult consumer backdrop” over the 26 weeks to the end of October.
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Citing lower-than-estimated sales and more caution around its Christmas trading outlook, the firm also said that full-year pre-tax profit will be “significantly below current market expectations”.
Bloomberg consensus was looking for pre-tax profit of £7.3m, compared with £6.7m last year.
Amid the mounting retail pressures, the company said it had ramped up its promotional activity and put an increasing focus on cutting costs.
“Against a challenging UK retail backdrop this is a disappointing trading update,” said analyst at Shore Capital.
They added: “The full year outturn will clearly be dependant on how the business trades over the key Christmas period but the update highlights that the company enters the peak trading period with a sound product proposition including Frozen 2 merchandise, which is predicted to be one of the winners this Christmas for kids.”
The firm opened a net 28 stores in the first half of the year, saying that the downturn on the high street was making retail space more affordable.
Chief executive Kevin Keaney said: “The consumer environment has remained challenging and we have been trading against strong comparators given last year’s Mega Trend. We have responded decisively to minimise the impact to our performance and are benefiting from easier comparators in the second half.”
He added: “We now look ahead to the busy Christmas period fully prepared and ready to deliver for our customers with a fantastic selection of good quality and great value products. Notwithstanding the current backdrop, we remain confident in our medium-term growth opportunities and we continue to invest to unlock them.”