The Works shares rise as value arts retailer boosts revenues
Discount UK retailer The Works saw its shares rise 10 per cent this morning after its full-year results showed increased underlying profit in the year to April 2019.
Read more: Arts and crafts store The Works plummets after profits take a hit
Investors were not put off by the heavy costs The Works incurred related to its initial public offering (IPO) in July 2018 and debt refinancing as shares hit 68.74p.
The figures
The arts and crafts chain’s adjusted profit before tax rose to £6.7m in the year to 28 April 2019, up 58.6 per cent from £4.2m a year earlier.
Yet its unadjusted profit before tax fell 9.6 per cent to £2.3m from £2.6m in the year ended April 2018.
The disparity was mainly due to a hit of £2.94m in IPO-related costs as well as charges for debt refinancing and relocation of e-commerce operations.
The Works’ revenue grew 13.2 per cent to reach £217.5m for the full year, from £192.1m previously.
It ended the 2019 financial year with net cash of £2.9m, up from 2018’s £24.5m in net debt.
The value retailer’s adjusted basic earnings per share rose 25.0 per cent to 9.0p from 7.2p a year earlier.
Yet its unadjusted basic earnings per share fell 52.5 per cent to 1.9p for the year ended in April, from 7.2p the previous year.
A maiden final dividend of 2.4p has been proposed, taking the full-year dividend to 3.6p.
Why it’s interesting
The Works began selling shares on the London Stock Exchange in July 2018, but its share price has since fallen 65 per cent.
Yet today’s results have cheered investors by showing the company can deliver revenue growth at a difficult time for the British high street.
The chain opened a net 50 new stores in the year to April, taking its total store estate to 497.
However, it noted that it faces a “challenging environment” and a “subdued” consumer spending backdrop.
What The Works said
Kevin Keaney, chief executive, said: “We delivered good like-for-like sales across all channels, as our continued focus on product newness and our nimble buying strategy enabled us to anticipate customer demand for current trends.”
“Opening new stores remains our biggest driver of growth and we have taken advantage of the favourable property market,” he said.
Read more: UK retail sales see biggest drop for 10 years in June
“Underlying like-for-like sales in the first nine weeks of the current year have improved since the final quarter of last year to plus one per cent,” he added.