I spoke to Gavin Peck re the online side of the business. They have considered closing it. It wasn't making them money. I think they would close it but the issue for them is they can't quantify how much business in the retail stores originates from people going online. I think they are doing some work in this area to measure it. Gavin said they would just like to get it profitable and holding its own and they'd be happy, tho trying to get more. H2 looks like being far better though and as you say, the new website layout and theme is far better and coherent/targeted to stuff to do away from the screen. It's greatly improved in my opinion.
Absolutely. I always check the BM Stores website for an idea of products sold before committing to the 4 mile drive to their store in the scary big town 🤔
I see B&M are down 4% today, also has a struggling SP. Is there any crude comparison to be drawn?
Don't know if this is normal for WRKS but spread looks unpleasant and off-putting this morning, on an up day as it happens. OB followers moving markets!!!?!
WRKS spread is like this...free float is small. I've gone from 25% down to near evens in a week.
B&M is more general goods? New ceo, has a good chunk of debt and pays a big dividend. Imagine cash flow is straining. I was tempted but high street is cut throat in most places.
Ranmore equity hold B&M and they have a seriously solid record.
On the aim stocks once an update has passed and the froth comes off / people lose interest then probably is best. No algo on aim stuff just good old fear and greed.
Margin expansion looks good in the trading update. Ecom not so but small part of business - even so seems a big hit with no improvement insight for Christmas. Even if turnover was flat at £270m with 5% margin EBITDA would be £13.5m full year. Maybe too much?
Trading update
In H1 FY26 The Works delivered total sales of £123.8m, 0.3% lower year on year (H1 FY25: £124.2m)(1), and a total like for like sales ("LFLs") increase of 0.3%.
Store LFLs increased by 4%, continuing to outperform the wider market(2), reflecting the ongoing delivery of our 'Elevating The Works' strategy. Although the consumer environment has remained challenging, more customer-focussed marketing campaigns and new ranges resonated well with our customers. The store performance was also supported by improved operational standards and early successes from our space optimisation initiative. We opened a net two new stores in H1 and are on track for a net five new store openings in FY26. Also strong buying support when dipped to 37p this morning.
Online sales, which represent less than 10% of sales, declined by 36% in the Period. This reflects the impact of operational challenges experienced following the transition to a new third-party fulfilment partner. Action has been taken to help mitigate the impact, however reduced outbound capacity and increased costs are expected to continue through the peak trading period while we work with our partner to provide a long-term solution.
Sustained product margin growth (+300bps vs H1 FY25) and ongoing cost savings have helped to more than offset cost headwinds in H1 FY26. Notable progress against our £2m cost reduction programme for FY26 includes savings in central people costs and efficiencies in our store distribution centre (DC), supported by the investment in our new mezzanine level within this DC.
The Company ended the Period with an improved net debt(3) position of £5.3m (H1 FY25: £8.5m). The Company's half year coincides with our traditional peak borrowing requirement to support the build of stock prior to peak trading.
Outlook
Mindful of subdued consumer confidence, our focus remains on delivering the factors within our control. We are well positioned to optimise store sales in our peak trading period which, together with sustained product margin growth and ongoing cost saving action, means we are on track to deliver FY26 profit in line with market expectations of pre-IFRS 16 Adjusted EBITDA of £11.0m.
"A more scientific approach to store space trials is being introduced to actually calculate and manage “sales densities” - rather than leaving the make up of stores to a branch manager’s discretion. "
Can you tell me your source? I missed this somehow.
Great write-up. In case you miss Woolworth - you are happily invited to Germany - here in Berlin we still have one :-)
That’s great to know - much easier travel than to Oz! And I hear Berlin is an amazing place to visit. OB
Thanks for the credits TOB.
I spoke to Gavin Peck re the online side of the business. They have considered closing it. It wasn't making them money. I think they would close it but the issue for them is they can't quantify how much business in the retail stores originates from people going online. I think they are doing some work in this area to measure it. Gavin said they would just like to get it profitable and holding its own and they'd be happy, tho trying to get more. H2 looks like being far better though and as you say, the new website layout and theme is far better and coherent/targeted to stuff to do away from the screen. It's greatly improved in my opinion.
Cheers
Absolutely. I always check the BM Stores website for an idea of products sold before committing to the 4 mile drive to their store in the scary big town 🤔
I see B&M are down 4% today, also has a struggling SP. Is there any crude comparison to be drawn?
Don't know if this is normal for WRKS but spread looks unpleasant and off-putting this morning, on an up day as it happens. OB followers moving markets!!!?!
WRKS spread is like this...free float is small. I've gone from 25% down to near evens in a week.
B&M is more general goods? New ceo, has a good chunk of debt and pays a big dividend. Imagine cash flow is straining. I was tempted but high street is cut throat in most places.
Ranmore equity hold B&M and they have a seriously solid record.
Great analysis as always Mr Oak. What price does it need to be to constitute a buy? Are we there now at 50p?
Unfortunately 42p last week Paul!
On the aim stocks once an update has passed and the froth comes off / people lose interest then probably is best. No algo on aim stuff just good old fear and greed.
Yeah, Paul Scott makes this point repeatedly.
Margin expansion looks good in the trading update. Ecom not so but small part of business - even so seems a big hit with no improvement insight for Christmas. Even if turnover was flat at £270m with 5% margin EBITDA would be £13.5m full year. Maybe too much?
Trading update
In H1 FY26 The Works delivered total sales of £123.8m, 0.3% lower year on year (H1 FY25: £124.2m)(1), and a total like for like sales ("LFLs") increase of 0.3%.
Store LFLs increased by 4%, continuing to outperform the wider market(2), reflecting the ongoing delivery of our 'Elevating The Works' strategy. Although the consumer environment has remained challenging, more customer-focussed marketing campaigns and new ranges resonated well with our customers. The store performance was also supported by improved operational standards and early successes from our space optimisation initiative. We opened a net two new stores in H1 and are on track for a net five new store openings in FY26. Also strong buying support when dipped to 37p this morning.
Online sales, which represent less than 10% of sales, declined by 36% in the Period. This reflects the impact of operational challenges experienced following the transition to a new third-party fulfilment partner. Action has been taken to help mitigate the impact, however reduced outbound capacity and increased costs are expected to continue through the peak trading period while we work with our partner to provide a long-term solution.
Sustained product margin growth (+300bps vs H1 FY25) and ongoing cost savings have helped to more than offset cost headwinds in H1 FY26. Notable progress against our £2m cost reduction programme for FY26 includes savings in central people costs and efficiencies in our store distribution centre (DC), supported by the investment in our new mezzanine level within this DC.
The Company ended the Period with an improved net debt(3) position of £5.3m (H1 FY25: £8.5m). The Company's half year coincides with our traditional peak borrowing requirement to support the build of stock prior to peak trading.
Outlook
Mindful of subdued consumer confidence, our focus remains on delivering the factors within our control. We are well positioned to optimise store sales in our peak trading period which, together with sustained product margin growth and ongoing cost saving action, means we are on track to deliver FY26 profit in line with market expectations of pre-IFRS 16 Adjusted EBITDA of £11.0m.
"A more scientific approach to store space trials is being introduced to actually calculate and manage “sales densities” - rather than leaving the make up of stores to a branch manager’s discretion. "
Can you tell me your source? I missed this somehow.
Sure it’s on Page 14 of the FY25 annual report, under FY26 strategic priorities.
Best, OB
Thx