The Works has reported a dip in profits as it was it hit by higher freights costs and increased business rates as Covid relief ended.
The discount retailer’s adjusted pre-tax profits plunged almost 40% to £10.1m in its year to 30 April, despite sales rising 5.8% to £280.1m.
The retailer’s gross margin declined 170 basis points, however, as it sound more lower-margin front-list books, from authors such as Julia Donaldson and Colleen Hoover.
It was also handed an additional £5.8m business rates bill as Covid-19 reliefs ended.
Like-for-like store sales, which represent 88.8% of the retailer’s total revenue, rose 7.5%, while online sales plunged 15%.
The Works CEO Gavin Peck said: “The Works delivered a resilient performance in FY23, despite facing some sizeable challenges.”
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“In the first half our focus was on protecting and rebuilding the business, but as the year progressed we were able to make more strategic progress. We have developed our brand and customer proposition, ensured that our ranging is aligned with customer demand and improved our store estate.
“We’ve also taken steps to enhance our online proposition and drive significant operational improvements across the business, the benefits of which we expect to be fully realised from FY24 onwards.”
The retailer said it was well-positioned to deliver both sales and profit growth in its current year.
Trading in the first 17 weeks of its current financial year has been in line with expectations, with like-for-like sales up 3.1%. It expects to make an adjusted EBITDA of around £10m.
The value chain also revealed that its chief financial officer Steve Alldridge plans to step down from his role by the end of this year.
The Works head of finance Rosie Fordham will succeed Alldridge.
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