The Works Online Sales More Than Doubled In The Last Full Year – But Can’t Make Up For Store Closures – Strategy & Innovation
The Works says its stores remain essential to its multi-channel model. Image courtesy of The Works
The Works reports today that online sales grew 120.9% in its most recent fiscal year as it experienced a period of “unprecedented demand” when its stores closed for Covid-19 lockdowns. But the growth of e-commerce has not been able to compensate for these store closings. Today, the retailer invests online, in customer engagement, but claims that its stores remain its “lifeblood”.
Discount book, craft and entertainment retailer, ranked Top100 in RXUK Top500 research, says it ended the year stronger than before the pandemic, with sales growing, losses falling and no net borrowing. Over the year as a whole, around 20% of sales were online – up from 10% before the pandemic – but e-commerce could not make up for the loss of commerce due to temporarily closed stores.
The rapid growth online has contributed to a “gradual shift” in profitability and has paid off the investment the discounted book, craft and entertainment retailer made in both additional processing capacity and retailing. new, more robust web platform. During the year, the retailer shifted its focus online and improved existing stores rather than focusing on new openings.
Today The Works reported turnover of £ 180.7million, in the 53 weeks leading up to May 2. This is a 19.7% drop from the previous year, largely due to temporary store closures during repeated Covid-19 closures. But when the effect of those store closures is excluded, like-for-like sales (LFL) rose 6% – to £ 128.9million – and online sales by 120.9% – to 62, £ 1million compared to £ 28.1million the previous year. Pre-tax losses fell to £ 2.8million from £ 18million a year earlier.
Gavin Peck, Managing Director of The Works, said: “It has been an extremely difficult year due to the Covid-19 pandemic but, due to our swift action, careful cost management and our ‘can -do ”, The Works has grown into a stronger company. While we can’t control temporary store closures, we have focused on things we can control, such as improving operations, carefully managing costs, and continuing to invest in our online offering.
He adds: “If, at the start of FY21, we had known that our stores would be closed for almost six months of the year, we would not have expected to achieve this resilient performance. The foundations we laid before the pandemic helped us get through the year much more successfully. We had already started reducing the importance of store openings in favor of accelerating profitable digital growth and improving the existing store base, with the goal of not only being a bigger version of us- same, but a better version.
“The net result is that we ended the year in a strong financial position, with no bank loans and that we are much more operationally efficient than we were before the pandemic. We are now even better prepared to execute our refocused strategy and are confident about the future prospects of the company. “
The retailer says sales were strong in-store when stores could trade, and online throughout the year. Families bought arts and crafts, books and puzzles to keep the kids entertained while adults looked for new activities, including adult coloring books and puzzle books. These trends continued in the new fiscal year.
Since year-end, in the 11 weeks leading up to July, the retailer has reported LFL revenue 13% ahead of the same period in 2019, and online sales are roughly double the level they were. during the same period. The comparison is with two years earlier because last year’s stores were closed for most of the period.
Going forward, the retailer now plans to continue investing online, where it will offer a wider range of products. “We have attracted many new customers to our website during the pandemic, and with a dramatic shift in online profitability, a new web platform and increased execution capacity, we can grow our online business with confidence. confidence, taking advantage of the expected continued increase in penetration of this channel. At the same time, it will continue to grow its brand and customer engagement, using tons, including better customer insight, analytics, and its ‘together’ loyalty program.
But its “lifeblood” store base of over 500 stores will remain an important part of the business. By the end of the year, the retailer had 527 stores, after 11 closings and four openings during the year, and it will make “selective” decisions to open more – but no more than 10 new stores per year at short term, whereas previously it seemed to be opening 50 per year. The new openings will focus on the top 100 locations where it is not yet selling. It will also leave loss-making stores where it is not possible to increase sales or renegotiate rents. “However,” he said in today’s release, “the key element of our new strategy is to improve the in-store customer experience in our existing stores by improving assortment, merchandising and facilitating shopping in stores. “
The retailer also said it would take a longer-term partnership approach with major suppliers.
Works president Dean Hoyle will step down in September after seven years and will be replaced by Carolyn Bradley.