TheWorks.co.uk (WRKS) H1 2026 earnings summary

Executive summary

• Achieved significant strategic and financial progress in H1 FY26, with strong store performance and improved profitability despite a challenging retail environment and online fulfilment issues.

• Continued execution of the Elevating The Works strategy, focusing on affordable, screen-free activities for families and operational efficiency.

• H2 trading in line with expectations, with robust store like-for-like sales and sustained product margin growth.

Financial highlights

• H1 FY26 revenue was £123.8m, down 0.3% year-over-year, with store LFL sales up 4% and online sales down 36% due to fulfilment challenges.

• Product gross margin increased by 330bps to 62.6%, driven by better buying, reduced markdowns, and selective price increases.

• Pre-IFRS 16 Adjusted EBITDA loss improved to £1.0m (H1 FY25: £2.8m loss); loss before tax reduced to £5.1m (H1 FY25: £6.5m loss).

• Net debt reduced to £5.3m (H1 FY25: £8.5m); closing cash and cash equivalents at £3.7m.

• Store payroll costs rose by £2.4m due to wage and NI increases; cost reduction programs delivered significant savings.

Outlook and guidance

• On track to meet FY26 market expectations of pre-IFRS 16 Adjusted EBITDA of £11.0m, with further profit growth expected in FY27.

• Expecting 10 net new stores and significant EBITDA growth in FY27.

• Cash expected broadly in line with prior year, with £7m capex planned for FY26.

• Initiatives underway to resolve online fulfilment issues and drive further cost savings and product margin growth.