The Works has recorded widening losses before tax as it warned of the potential impact of ongoing supply chain disruptions on its outlook.
The value retailer reported an adjusted loss before tax of £7.8m for the 26 weeks ending October 29, as well as loss before tax of £14.8m and Pre-IFRS 16 adjusted EBITDA loss of £8.5m.
The business said it faced tough cost headwinds due to inflation and the increase in National Living and Minimum Wages across the period.
However, The Works saw 3.1% growth in total revenue of 3.1% to £122.6m and total like-for-like sales growth of 1.6% despite trading against a “challenging backdrop with softened consumer demand”.
Chief executive Gavin Peck said: “Market conditions have been persistently challenging, putting pressure on our sales and profit performance in the first half and throughout the festive period.
“It is clear that many families celebrated Christmas on tighter budgets this year, and whilst we offered excellent value, we were not immune to this reduced spend.”
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Peck added: “We have started the new calendar year on an improved sales trajectory, with a strengthened leadership team to drive forward our strategy and exciting Easter and summer toy ranges due to land later this year.
However, we are also mindful of external challenges, including recent supply chain disruption in the Red Sea. Our focus for the remainder of the year will be on cost reduction, rebuilding margin and profitability, and conserving cash.
It is necessary to take this action now to stabilise the profitability of the business during this challenging period, however we remain confident that our “Better, not just Bigger” strategy is the right direction for the business and will enable a return to sustainable growth in the long term.”
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