// Shares in The Works plummeted by 43% on the stock market this morning after it issued a profit warning
// Like-for-likes had dropped 3.6% on the back of total sales increase of 5.4%
// The Works warned it expected “full-year profit before tax to be significantly below current market expectations”
Shares in The Works took a battering this morning after the retailer warned that profit will be much lower than expected over the year, even as it eyes the vital Christmas period.
The gifts, arts & crafts and stationery retailer’s value on the London markets fell a massive 43 per cent after it said it had been hit by a “difficult consumer backdrop”.
When stripping out high sales of Squishies – squeezable toys for children – like-for-like sales dropped by 1.9 per cent.
When including Squishies, like-for-like sales fell 3.6 per cent.
Meanwhile, total revenue increased 5.4 per cent.
The Works excludes so-called mega trends, products that account for more than three per cent of weekly sales over a “material” time period.
“The consumer environment has remained challenging and we have been trading against strong comparators given last year’s mega trend,” chief executive Kevin Keaney said.
Although sales have improved in recent weeks, the board warned it expected “full-year profit before tax to be significantly below current market expectations”.
However, Keaney said he is still “confident” in The Works’ ability to grow in the medium term.
“We have responded decisively to minimise the impact to our performance and are benefiting from easier comparators in the second half,” he said.
“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.”
The Works has 525 stores in the UK and Ireland, and hopes to open another 22 before the end of the financial year.
“The current high street environment creates opportunities, with the structural shift in the retail sector resulting in a strong pipeline of affordable, good-quality retail space,” it said in a statement.