Theworks.co.uk Plc · LSE:WRKS
Theworks.co.uk — H1 FY22 Earnings Presentation
25 slides from Theworks.co.uk's earnings presentation, Jan 27, 2022
Slide 1: FY22 interim results presentation
TheWorks.co.uk What will you discover? FY22 interim results presentation 26 weeks ended 31 October 2021 27 January 2022
Slide 2: Agenda
Agenda • Highlights Gavin Peck (CEO) • Financial Review Steve Alldridge (CFO) • Business Review Gavin Peck (CEO) 1
Slide 3: Highlights
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Slide 4: Strong H1 trading performance – ahead of expectations and pre-pandemic levels
• Strong H1 trading performance – ahead of expectations and pre-pandemic levels • Improved H1 profit despite significantly higher freight costs • Record peak trading performance – supports upgrade to full year expectations (to approx. £15m EBITDA) • Further strengthened balance sheet • Bringing forw
Slide 5: Financial Review
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Slide 6: EBITDA £2.5m vs. £1.5m LY
• EBITDA(1) £2.5m vs. £1.5m LY (and (£3.9m) in FY20) • Sales increased due to strong 2Y LFL growth and uninterrupted trading throughout H1 FY22 • Higher freight costs and resumption of normal discounting in H1 FY22 lowered product margin % • Full government COVID-19 reliefs were received in FY21 • R
Slide 7: Strong 2 year LFL sales performance during H1 and subsequent 11 weeks
H1 FY22 H1 FY21 Variance Variance £m £m £m % LFL sales 116.8 95.5 21.3 22.3% Sales from new/closed stores 15.2 6.0 9.2 153.3% Gross Sales 131.9 101.5 30.4 30.0% VAT (15.1) (11.9) (3.2) 26.9% Loyalty points redeemed (0.7) (0.6) (0.1) 16.7% Revenue (per statutory accounts) 116.1 88.9 27.2 30.6% Store
Slide 8: Product gross margin and discount levels
HY1 FY22 HY1 FY21 (restated) % of % of Variance £m £m Variance % revenue revenue £m Revenue 116.1 88.9 27.1 30.5 Less: Cost of goods sold 47.0 33.1 13.8 41.7 Product gross margin 69.1 59.5 55.8 62.7 13.3 23.9 Product gross margin (i.e. cost of products sold excluding stores & online costs) decreased
Slide 9: Other costs in cost of sales
HY1 FY22 HY1 FY21 (restated) % of % of Variance £m £m Variance % revenue revenue £m Other costs included in statutory cost of sales Store payroll 21.2 18.3 19.2 21.6 2.0 10.4 Store property and establishment costs 20.7 17.8 18.1 20.3 2.6 14.5 Store PoS & transaction fees 1.1 0.9 0.7 0.8 0.3 45.4 Sto
Slide 10: Other operating income, distribution and administration costs
HY1 FY22 HY1 FY21 % of % of £m Other operating income £m £m % Variance revenue revenue Variance Furlough benefit (0.1) (0.1) 4.5 5.1 (4.6) (102.2) COVID 19 retail grant - - 0.7 0.8 (0.7) (100.0) (0.1) (0.1) 5.1 5.8 (5.2) (102.0) Adjusted distribution costs 4.1 3.5 3.4 3.9 0.6 17.8 Depreciation - - 0
Slide 11: Capital expenditure
H1 FY22 H1 FY21 Variance £'m £'m £'m New stores and relocations 0.4 - 0.4 Store refits and maintenance 0.6 0.1 0.5 IT 0.3 0.3 - Online development 0.1 0.6 (0.5) Other 0.2 0.1 0.1 Total 1.6 1.1 0.5 • Three new stores opened plus four relocated • Corresponding landlord contributions received in H2 FY2
Slide 12: Cash flow and net cash
H1 FY22 H1 FY21 (1) Variance £m £m £m Cashflow pre-working capital 6.7 3.2 3.5 Net movement in working capital 19.7 17.3 2.4 Capex (1.6) (1.1) (0.5) Tax - (0.1) 0.1 Interest/financing costs (0.2) (0.8) 0.7 Dividends - - - Cashflow before loan movements 24.6 18.5 6.1 Drawdown/(repayment) of CLBILS lo
Slide 13: Business Review
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Slide 14: Trading update: 2yr LFL +14.5%
• 2yr LFL +14.5% Strong growth in stores (+7.3%) – continued growth in ATV offsetting lower retail footfall Online sales almost double (+80.7%) – despite lower promotions/reduced marketing spend • Sales growth being driven by: Improved customer offer – e.g. front-list books, branded toys and g
Slide 15: Our purpose: We are people who do, inspiring people to do
Our purpose: “We are people who do, inspiring people to do” 1. Develop our brand and increase our customer engagement Our building 2. Enhance our online proposition blocks 3. Optimise our store estate 4. Improve our operational capabilities Drive Invest in our Build on our Develop our Our enablers o
Slide 16: Developing our brand and customer engagement
• New clarity of purpose – “Inspiring People to Do” – and customer focus to drive: − Improved customer proposition New customers to our brand Increased loyalty of, and engagement with, existing customers • Key progress made in H1: Clarified our purpose, developing plans to bring this to life
Slide 17: Enhancing our online proposition
• Digital channel almost double pre-pandemic levels, with step change in profitability • Significant further growth potential – opportunities include: Attracting new customers to the brand through improved digital marketing − Further improving customer experience on new platform (e.g. better navig
Slide 18: Optimising our store estate
• Store estate remains lifeblood of business and will be for many years to come − Focus on optimising existing store estate through: Improving customer experience – e.g. better ranging, availability, merchandising, navigation, retail discipline and customer service Relocations/refits of oldest s
Slide 19: Improving operational capability and efficiency
• Becoming a more agile and modern business – improving operational capability and efficiency • Business-wide improvement initiatives, including: End to end stock management improvements (e.g. import supply chain, store fulfilment) Implementing automation in parts of online fulfilment operations
Slide 20: Summary and outlook
• Strong H1 trading performance – ahead of expectations and pre-pandemic levels • Improved H1 profit despite significantly higher freight costs • Record peak trading performance – supports upgrade to full year expectations (approx. £15m EBITDA) • Further strengthened balance sheet • Bringing forward
Slide 21: Questions
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Slide 22: Appendices
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Slide 23: IFRS 16 impact on PBT
HY1 FY22 HY1 FY21 Variance £m £m £m Deduct non IFRS 16 components IAS 17 rental charge 12.4 12.8 (0.4) Non IFRS 16 depreciation on leased assets 0.5 0.6 (0.1) Non IFRS 16 interest on leased assets - - - 12.9 13.4 (0.4) Add IFRS 16 charges Depreciation on right of use asset (10.4) (12.0) 1.6 Notional
Slide 24: EBITDA to PBT reconciliation
H1 FY22 H1 FY21 £m £m Adjusted EBITDA pre IFRS 16 2.5 1.5 Pre IFRS 16 net financing expense (0.4) (0.3) Loss on disposal of PPE (0.2) (0.2) Loss on disposal of intangibles - (0.6) Old web platform write off Depreciation of PPE (2.6) (2.6) Amortisation of intangibles (0.4) (0.6) Depreciation on "old"
Slide 25: Summary balance sheet extract
H1 FY22 H1 FY21 Movement Summary balance sheet extract £m £m £m Non current assets 124.4 136.8 (12.5) Stock 40.0 38.5 1.5 Other current assets 16.0 9.7 6.3 Gross cash 17.8 16.8 1.0 Total assets 198.2 201.9 (3.7) Interest bearing borrowings 27.7 29.6 2.0 Other current liabilities 65.8 55.6 (10.2) Non