Retail chain The Works encouraged by post-lockdown sales pick-up after tough year: reaction
Books and hobbies chain The Works has enjoyed a post-lockdown jump in store sales leading to a dip in booming online trade.
The firm said online sales were still high, despite cooling when lockdown restrictions eased to allow physical stores to reopen.
The business, which has become a familiar sight on Scottish high streets with its bright blue and yellow frontages, reported a 121 per cent boom in online sales over the past year, however it was unable to make up for its shops, which have been closed for more than a third of the time.
For 16 of the 53 weeks to the start of May all of The Works’ stores were closed due to lockdown restrictions on “non-essential” retailing, and more than 75 per cent of its estate was forced to shut for an additional eight weeks.
In a trading update, chief executive Gavin Peck said: “Like many retailers, the last 12 months have been incredibly challenging for The Works, which has historically relied mainly on in-store sales. Our business was severely impacted by successive lockdowns and forced closures of our entire store estate.”
Since the stores reopened, online sales have reduced, but they are still “significantly ahead” of their pre-pandemic levels, the retailer noted.
Total sales were down 19 per cent to £206.2 million in the period, driven purely by the physical shops.
But when the shops were open they performed well. Like-for-like shop sales grew 6 per cent over the year.
It is still too early to say whether this is a sign that the group’s 527 shops are performing well, or if they just saw a bounce because of pent-up demand.
The company said that it sticks to the forecast that it issued in January when the latest round of lockdowns kicked in.
Peck added: “Since we couldn’t control store closures we focused on the things we could, keeping tight control of costs, optimising our operations and vastly improving our online offering.
“As a result, our financial position remained strong, online growth exceeded our expectations, and when stores reopened we saw customer demand returning quickly to pre-Covid levels.”
Clive Black, an analyst at brokerage Shore Capital, said: “As with many offline players in the British retail scene, the group has faced into a tumultuous year or so as a result of the coronavirus pandemic.
“Such challenge, such change has inevitably metamorphosed the learning, the capability and the operation of The Works in the online space, which to us will serve the business much better in the future; as with many retail organisations, many years of anticipated online learnings has been concentrated into just one.”
He added: “On current trade and the outlook, The Works is encouraged by sales since the majority of stores reopened across the UK (the group’s stores in the Republic of Ireland are due to reopen on Monday 17 May), unsurprisingly including an easing back of online activity.
“Whilst so, the wider context, noting the current concerns around new variants of coronavirus, is fragile.”