TheWorks.co.uk (WRKS) H2 2024 earnings summary

Executive summary

• Revenue reached £282.6 million for the 53-week period ending May 5, 2024, with store like-for-like sales up 0.6% and online like-for-like sales down 12.4%.

• EBITDA met the £6 million forecast, and the year ended with a positive cash balance of £1.6 million.

• Operational improvements and cost-saving measures were implemented to offset significant cost headwinds and supply chain disruptions.

• The business is positioned for profit growth in FY 2025, with a forecast EBITDA of £8.5 million.

Financial highlights

• Store sales growth offset online declines; online channel broke even after profitability-focused changes.

• Gross margin was pressured by product mix, promotional activity, and FX headwinds, but improved in Q4.

• Payroll costs increased by £3.4 million, but labor efficiency projects and rent negotiations delivered savings.

• Distribution costs rose by £2.4 million due to capacity issues and higher volumes.

• Ended the year debt-free, with a year-end cash position of £1.6 million (or £6.5 million on a 52-week comparable basis).

Outlook and guidance

• FY 2025 EBITDA is forecast at £8.5 million, with expected year-end cash of £5 million and CapEx of £5 million.

• Focus remains on returning to a 5% EBITDA margin over the medium term.

• Current trading is in line with expectations, with operational improvements addressing prior capacity issues.

• Further details on the evolved strategy and three-year financial targets will be shared in January.