TheWorks.co.uk (WRKS) H1 2025 earnings summary

Executive summary

• Significant operational, financial, and strategic progress achieved in H1 FY25, including a new brand identity and mission underpinning a refreshed strategy.

• Profitability improved markedly, with pre-IFRS 16 EBITDA loss reduced to £2.8m from £8.5m year-on-year.

• Store trading remained resilient despite a challenging consumer environment, while online sales were impacted by third-party fulfilment issues.

• New five-year strategy targets sales over £375m and EBITDA margin of at least 6%.

• On track to meet FY25 market expectations, with further profit growth anticipated in FY26.

Financial highlights

• Revenue rose 1.3% year-on-year to £124.2m; store LFL up 0.9%, online LFL down 14.7%.

• Product gross margin increased to 59.3% from 57.2%, driven by supplier negotiations, reduced promotions, and FX tailwinds.

• Net debt at period end was £8.5m, higher due to calendar shift, increased stock in transit, and Red Sea disruption.

• H2 trading started well, with Christmas store LFL up 1% and continued strong trading into January.

• FY25 EBITDA expected at £8.5m (vs £6m prior year); positive cash of ~£4m projected.

Outlook and guidance

• On track to meet FY25 pre-IFRS 16 Adjusted EBITDA guidance of £8.5m and expect further profit growth in FY26.

• Strategic initiatives and cost transformation project expected to offset significant cost headwinds in FY26.

• Five-year plan aims for sales above £375m and EBITDA margin of at least 6%, with £22.5m+ EBITDA.

• Anticipate modest sales growth for the remainder of FY25; expect net cash of ~£4m at year-end.