// The Works fears the cost of living will have an impact customer shopping habits this Christmas
// The business is maintaining a “cautious approach” in these market conditions and has materially lowered in expectations in relation to results
Bosses at the books, toys and stationery retailer The Works have aired their fears about the impact that the cost of living will have on customer spending this Christmas, as it slashed its outlook for this year.
The retailer said that since the start of this year the general market outlook has deteriorated, as consumer confidence has plummeted and inflation has soared.
“It is not clear how long these market conditions will persist, which creates a heightened degree of uncertainty about how consumers will behave, particularly in the forthcoming Christmas shopping season, The Works’ most important trading period,” The Works said.
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Despite concerns, the retailer says it expects to grow sales this year but it’s uncertain as to whether the level of growth will be able to offset cost headwinds such as freight costs.
The Works says therefore it would like to maintain a “cautious approach” and has materially lowered in expectations.
In the most recent quarter like-for-like sales in The Works shops edged up 1.4%, despite a big drop in website sales.
Online like-for-like sales fell almost 29% in the first quarter of the financial year, although they are still 40% above pre-Covid levels.
Total sales in the first quarter were 1.3% lower than a year ago.
At the start of the year the retailer was hit by a cyber security attack and while the immediate impact on trading was limited, the action taken to secure the business had an impact on store and online trading.
The Works chief executive Gavin Peck said: “Since the start of the financial year we have faced the residual effects of the cyber security incident and increasingly challenging trading conditions.
“Our recent online sales performance reflects the challenges facing the broader sector but remains significantly higher than pre-Covid levels and we remain confident that the long term investment we have made in our customer proposition will see further growth.
“The Works is a remarkably resilient business and the group’s financial position remains robust. Although the near term market conditions are very uncertain, we are confident that our ‘better, not just bigger’ strategy still has a lot more upside to deliver in the medium term”.
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