Covid-19: The Works reports strong online demand in lockdown

Books, stationery and toys retailer The Works has reported a 3.5% year-on-year increase in revenue for the full year to 26 April, saying that like-for-like (LFL) sales edged up by 0.7% in the full-year period before the Covid-19 coronavirus forced the closure of stores.

The business said there was a significant increase in sales, both in stores and online, prior to enforced store closures, as consumers planned for lockdown in March. Overall LFL sales were up by 81% in the week to Sunday 22 March, one day before the prime minister ordered ‘non-essential’ retailers to close their shops to the public.

Products to support children’s ongoing education in light of schools temporarily closing down, as well as mindfulness materials to support mental health and products to "beat the boredom" during this period of social distancing, were all reportedly popular.

The Works said there has been a strong demand online in lockdown, with sales up more than three-times the equivalent period last year. Like other businesses, including homeware and clothing retailer Next, The Works has placed a daily limit on eCommerce sales to ensure the warehouse can operate as safely as possible.

“The company is working closely with its third-party fulfilment partner to expand its online fulfilment capacity both in the short-term and to support increased volumes through peak trading over Christmas,” today's trading statement added.

Over the course of the year, the retailer opened a net 37 new stores, taking the total number of stores in its estate to 534. They are all currently temporarily closed, of course, and before the Covid-19 outbreak the company was trading in line with the board's expectations and was on target to be debt free at year-end. 

Similar to so many other retailers, those plans and targets have had to change, with capital expenditure for the year ahead reduced from the previously proposed £9 million to £3 million, and a new store rollout programme suspended.

Attention has turned to discussions with landlords to reduce rents while stores are closed, and the business said it is working with suppliers to review stock intake plans and agree extended payment terms. There has also been a significant reduction in online marketing spend and promotional activity.

Net debt as of 26 April stood at circa £7.9 million, which The Works said reflected the impact of the partial unwind of working capital and the impact of stores not trading for the last five weeks of the financial year. The company has access to a £25 million revolving credit facility.