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Click & collect fastest growing channel for The Works in 'solid year'

Books and gifts retailer The Works is opening stores, driving sales and seeking further growth, with its preliminary results showing the business is progressing well as a publicly-listed company.

The company started trading on the London Stock Exchange on 19 July 2018, and its results for the year to 28 April 2019 are encouraging at a time when many retailers in the UK are facing challenging headwinds.

Revenue grew by 13.2% year-on-year to £217.5 million and the business reported a net cash position of £2.9 million versus £24.5 million net debt one year before, although investment in growth – including the opening of a net 50 stores in the period – dragged on profit, which was down by 9.3% to £2.3 million.

The Works’ multichannel proposition appears to be resonating with customers, with CEO Kevin Keaney saying the group was “particularly pleased” with the performance of its click & collect service. He said it remains the fastest growing channel for the business, and resulted in half a million additional customer visits to stores in the year.

“Opening new stores remains our biggest driver of growth and we have taken advantage of the favourable property market by opening a net 50 new stores in the year,” he explained.

“We delivered good like-for-like sales across all channels, as our continued focus on product newness and our nimble buying strategy enabled us to anticipate customer demand for current trends and seasonal ranges.”

Keaney added that underlying like-for-like sales in the first nine weeks of the current financial year have improved since the final quarter of last year, and the company expects that to remain the case for the immediate future. The Works plans to deliver another 50 new net store openings before the end of this financial year.

During its first year as a listed business, The Works refreshed its online customer journey and in-store processes for click & collect, as well as launching a transactional website in the Republic of Ireland.

Active loyalty members grew by 0.7 million to 1.8 million, while online fulfilment operations have been outsourced to iForce to support the extension of its ranges and expanding network of stores.

Today’s preliminary results statement is full of positive updates, but Keaney and the company chairman, Dean Hoyle, who says he is on the road to recovery after being diagnosed with pancreatitis, both caution that it is an uncertain market to trade in.

Nevertheless, The Works is certainly an example of a retailer that has benefited from the wider downturn in the retail market, taking advantage of cheaper and more flexible leasing opportunities that have emerged as a result of other businesses collapsing.

“Each store location is examined individually to ensure that we are consistently opening in the right places,” Keaney noted.

“We have complemented this during the year with a new forecasting tool developed in conjunction with CACI, the location planning consultants. Our lease terms are flexible with an average of less than three years to the next break or exit point, ensuring we continue to benefit from new opportunities in these favourable property market conditions.”

He also suggested The Works is seeing payback on new stores within a year of opening, which reinforces group confidence that a portfolio of up to 1,000 stores in the UK and Ireland can be supported.