Theworks.co.uk Plc · LSE:WRKS
Theworks.co.uk — H1 FY24 Earnings Presentation
23 slides from Theworks.co.uk's earnings presentation, Jan 18, 2024
Slide 1: FY24 Interim Results and Christmas Trading Update
FY24 Interim Results and Christmas Trading Update 26 weeks ended 29 October 2023 18 January 2024
Slide 2: Agenda
Agenda Strategic Overview Gavin Peck (CEO) Financial Review Rosie Fordham (CFO) Business Review Gavin Peck (CEO) 2
Slide 3: Strategic Overview
Strategic Overview
Slide 4: Strategic Overview
Strategic Overview • “Better, not just Bigger” strategy – opportunity to step-change sales and profitability ‐ Building a more purposeful and sustainable brand and customer proposition ‐ Transforming and modernising business operations • Progress-to-date has been hindered by significant external int
Slide 5: Financial Review
Financial Review Rosie Fordham, CFO
Slide 6: Overview
Overview Delivered an EBITDA(1) loss of £(8.5)m vs. H1 FY23 loss of £(6.4)m £m H1 FY23 EBITDA1 (6.4) • Result reflective of a challenging macro economic environment Additional margin from year-on-year sales increase 2.0 Higher product gross margin percentage 1.1 • Revenue increased by 3.1% Variable
Slide 7: Sales
Sales LFL Sales Growth Detail Total revenue growth of 3.1% and total LFL sales growth of 1.6% Stores Online Total • LFL store sales up 3.5% Q1 6.4% (13.1%) 4.5% Q2 1.2% (11.8%) (0.5%) • Strong store sales delivered in the early summer months H1 3.5% (12.2%) 1.6% • Performance slowed in the second ha
Slide 8: Product gross margin
Product gross margin H1 FY23 H1 FY24 Product gross margin increased to 57.2% from 56.3% last year Restated % of % of Variance Variance o Beneficial container freight rates, offsetting; £m £m revenue revenue £m % o Hedged FX rate headwind in H1 and into H2 Revenue 122.6 118.9 3.6 3.1 o Toys and games
Slide 9: Operating Costs included in cost of sales
Operating Costs included in cost of sales H1 FY24 H1 FY23 (Restated) % of % of £m £m £m % Variance revenue revenue Variance Store payroll (24.8) (20.2) (23.0) (19.4) (1.7) (7.6) Store property and establishment costs (25.4) (20.8) (25.2) (21.2) (0.3) (1.0) Store PoS & transaction fees (1.2) (1.0) (0
Slide 10: Other costs
Other costs H1 FY24 H1 FY23 (Restated) % of % of £m % £m £m revenue revenue Variance Variance Distribution costs (Excl Dep’n and IFRS16) (6.7) (5.5) (5.0) (4.2) (1.7) (34.0) Administration costs (Excl Dep’n and IFRS16) (13.3) (10.9) (10.9) (9.2) (2.4) (21.9) Store distribution costs increased by £1.
Slide 11: Capex
Capex H1 FY24 H1 FY23 Variance Capital expenditure in the Period was £3.1 million (H1 FY23: £2.5m) £m £m £m • Lower leasehold contributions from landlords YoY New stores and relocations (0.6) (0.0) (0.6) • 19 Store refits vs 21 in the prior period Store refits and maintenance (1.6) (1.2) (0.4) IT ha
Slide 12: Stock
Stock Stock was valued at £56.1m at the end of the Period, an increase of £2.5m The operating cycle of the business causes maximum stock levels prior to the Christmas H1 FY24 H1 FY23 sales peak. £m £m Gross stock 50.5 46.6 The stock value was higher than normal at the end of H1 FY24 due to the follo
Slide 13: Cash
Cash H1 FY24 H1 FY23 Variance £m £m £m The Group ended the period with net debt of £2.5m Operating cash flows before changes in working 5.1 5.6 (0.5) capital • £17.5m of headroom within our £20.0m bank facility at the end of the Deduct from statutory presentation: rent payments (13.9) (14.3) 0.4 per
Slide 14: Business Review
Business Review Gavin Peck, CEO
Slide 15: Trading performance and action taken
Trading performance and action taken • Trading since end of H1 lower than expected, with total LFLs -4.9% (stores -3.9%; online -11.2%) • Decisive action already taken: ‐ Rebuilding gross margin ‐ Reducing costs Store labour efficiencies DC efficiencies Online fulfilment savings Rent savings
Slide 16: Our “Better, not just Bigger” Strategy
Our “Better, not just Bigger” Strategy Our Strategic Pillars Develop our brand and Enhance our Optimise our Drive operational increase customer online proposition store estate improvements engagement Our Strategic Enablers Our Our Systems Our ESG Colleagues and Data Commitments 16
Slide 17: Develop our Brand and Increase Customer Engagement
Develop our Brand and Increase Customer Engagement Objective: Reach new customers, increase existing customer engagement and evolve external perceptions of The Works. Key progress in FY24 to date: • Further developed product offer • Brand marketing strategy being reviewed in light of cost management
Slide 18: Enhance our Online Proposition
Enhance our Online Proposition Objective: Increase awareness of our website and make it a more inspiring destination for our customers Key progress in FY24 to date: • Enhanced online customer experience, driving improvement in site KPIs • Improved online profitability • Online roadmap being develope
Slide 19: Optimise our Store Estate
Optimise our Store Estate Objective: Create a store environment that can inspire our customers and reflect the communities we serve Key progress in FY24 to date: • Ongoing portfolio management, improving overall estate • Continued to drive significant rent savings on lease renewals • Undertaken 19 s
Slide 20: Drive Operational Improvements
Drive Operational Improvements Objective: Improve our ways of working to become a better and more modern retailer, whilst ensuring we continue to operate efficiently and in a cost-effective way Key progress in FY24 to date: • Continued focus on enhancing end to end stock flows in the business • Impl
Slide 21: Summary
Summary • Transformational “Better, not just Bigger” strategy ‐ Opportunity to step-change sales and profitability ‐ Progress-to-date has been hindered by significant external interferences • Consumer environment increasingly challenging; Christmas trading below expectations • Decisive action taken,
Slide 22: Q&A
Q&A
Slide 23: Disclaimer
Disclaimer This presentation is being made only to and directed at: (a) persons who have professional experience in matters relating to investments falling within Article 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “FPO”); or (b) high net worth entities, a