Theworks.co.uk Plc · LSE:WRKS
Theworks.co.uk — The Works — FY2023 Earnings Presentation
23 slides from Theworks.co.uk's earnings presentation, Aug 30, 2023
Slide 1: FY23 Results Presentation
FY23 Results Presentation 52 weeks ended 30 April 2023 30 August 2023 us W WORKS
Slide 2: Agenda
wy Agenda * Highlights - Gavin Peck (CEO) * Financial Review — Steve Alldridge (CFO) * Business Review — Gavin Peck (CEO)
Slide 3: Highlights
yy Highlights Gavin Peck, CEO —\
Slide 4: Resilient performance against challenging consumer environment and cyber incident
Ss Resilient performance against backdrop of challenging consumer environment and residual impact of cyber security incident Store estate driving strong LFL sales growth; online seeing continued post-COVID channel rebalancing Strong financial position — net cash of £10.2m at end of FY23 1.6 pence pe
Slide 5: Financial Review
yy Financial Review Steve Alldridge, CFO —\
Slide 6: Financial highlights
hlights Delivered EBITDA" £9.0m vs. FY22 £16.6m (in line with revised expectations) Revenue growth of £15.5m driven by strong stores sales and channel shift * Optimisation of the store estate contributed +£0.6m profit Product gross margin % declined due to sales mix (e.g. front list books) and freig
Slide 7: LFL sales growth of +4.2%, gross sales up +6.1%
LFL sales growth of +4.2%, gross sales increased +6.1% and statutory 1Year LFL sales growth Stores Online Total +5.8% revenue up +5.8% a 16% (28.6%) (2.4%) Store LFLs progressively strengthened, whilst online sales lagged: Q2 51% (8.9%) 3.0% > Ql HI 3.6% (16.9%) 0.6% o Residual impact of cyber secur
Slide 8: Gross margin
ss margin FY23 FY22 Restated % of % of Variance Variance £m £m revenue revenue £m % Revenue 280.1 264.6 15.5 5.8 Less: Cost of goods sold 118.8 107.7 Nl 10.3 Product gross margin 161.3 57.6 157.0 59.3 44 (17) Product gross margin rate decreased by 170bps to 57.6% (FY22: 59.3%). * — Planned growthin
Slide 9: Costs included in cost of sales
osts included in cost of sales Store payroll costs increased due to: . National Living Wage inflation . Timing of new store openings/closures (i.e. we traded more stores through peak) Store property costs + COVID-19 rates relief ceased (£5.8m in FY22) . Increased due to electricity cost inflation .
Slide 10: Distribution and admin costs
ution and admin costs * Retail distribution costs increased by £1.2m + NLW and transport costs inflation FY23 FY22 Variance + — Higher volumes handled £m roe £m roe —m % + Additional storage costs during pre-Christmas stock build Distribution costs 103 37 91 34 (12) (12.7) * Admin costs increased by
Slide 11: Interest, tax, EPS and dividend
Interest + 93% of the interest charge was non-cash IFRS 16 notional interest + — Bank interest payable (facility availability charges) was £0.3m (FY22: £0.4m) + £0.2m of interest was received in FY23 (FY22: nil) Tax * — Prior period adjustment to impairment charges (particularly to IFRS 16 “asset")
Slide 12: Capex was £6.7m (FY22: £3.0m)
Capex was £6.7m (FY22: £3.0m) ¢ New stores and relocations * 14 new stores, 3 relocations, 13 closed (FY22: 5 new stores, 6 relocations) FY23. FY22_ Variance + Approximately 50% landlord funded vs. almost 100% in FY22 —fm fm Em e — Store refits, maintenance and lease renewal costs New stores and rel
Slide 13: Liquidity
uidity Year end net cash £10.2m + Lower profits and unwind of creditors were the most significant differences compared with FY22 + — “Normal” cashflows fully resumed in FY23 but were lower in FY22, i.e. capex, tax, dividends Bank facilities and financial position + Extended facility until November 2
Slide 14: Business Review
yy Business Review Gavin Peck, CEO —\
Slide 15: Our 'Better, not just Bigger' Strategy
Our “Better, not just Bigger” Strategy @ @ @ KRY Develop our brand and increase customer engagement Enhance our online proposition Optimise our store estate eee Our Colleagues Our ESG Commitments & Drive operational improvements
Slide 16: Develop our Brand and Increase Customer Engagement
our Brand and Increase Customer Engagement Objective: Reach new customers, increase existing customer engagement and evolve external perceptions of The Works Delivered in FY23: * Launched brand evolution, aligned to new purpose * Further developed product offer, including: Fine-tuning of adult books
Slide 17: Enhance our Online Proposition
e our Online Proposition Objective: Increase awareness of our website and make it a more inspiring destination for our customers Delivered in FY23: * Increased focus on enhancing online customer experience, supported by: - Brand evolution applied to website - Usability studies commissioned * In-hous
Slide 18: Optimise our Store Estate
e our Store Estate Objective: Create a store environment that can inspire our customers and reflect the communities we serve Delivered in FY23: + Improved store look and feel through brand evolution * Prudent portfolio management, improving overall quality of estate - 14new stores, 3 relocations, 13
Slide 19: 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 ina cost-effective way Delivered in FY23: * Continued focus on enhancing end to end stock flows in the business - New stock alloc
Slide 20: Our Strategic Enablers
OuFStrategic Enablers Our Our Systems Our ESG Colleagues and Data Commitments Placed 12th in Best Big Companies New EPOS software developed for Established mission of to work for in 2022 (up from 13‘) rollout in FY24 Doing Business Better Launched new Communication and New stock allocation system Re
Slide 21: Current Trading
‘Current Trading — 17 weeks to 27 August * Robust sales performance in light of external trading environment - Total LFLs +3.1% (stores +5.4%, online -18.4%) * Growth driven by: - Strong performance of "Get, Set, Play” outdoor fun range - New range launches across toys and games - Further operationa
Slide 22: Summary
Summary * Resilient performance against backdrop of challenging consumer environment and residual impact of cyber security incident * Store estate driving strong LFL sales growth; online seeing continued challenges * Strong financial position — net cash of £10.2m at end of FY23 * 1.6 pence per share
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