Theworks.co.uk Plc · LSE:WRKS
Theworks.co.uk — The Works — FY2024 Earnings Presentation
29 slides from Theworks.co.uk's earnings presentation, Oct 1, 2024
Slide 1: FY24 Results Presentation
FY24 Results Presentation 53 weeks ended 5 May 2024 1 October 2024
Slide 2: Agenda
Agenda Overview Gavin Peck, CEO Financial Review Rosie Fordham, CFO Strategy Update Gavin Peck, CEO Current Trading & Summary Gavin Peck, CEO 2
Slide 3: Overview
Overview Gavin Peck, CEO
Slide 4: FY24 ended in-line, well-positioned for growth in FY25
FY24 ended in-line, well-positioned for growth in FY25 • Ended FY24 in line with market expectations despite challenging trading conditions • Decisive action taken to improve product margins, reduce costs and scale back non- essential investments • Well positioned to offset cost headwinds and return
Slide 5: Financial Review
Financial Review Rosie Fordham, CFO
Slide 6: FY24 Financial highlights
FY24 Financial highlights Pre-IFRS 16 Revenue £282.6m LFL Sales -0.9% Adjusted EBITDA £6.0m (FY23: £280.1m) (FY23: +4.2%) (FY23: £9.0m) Profit Cash before tax £6.9m at bank £1.6m Dividend Nil (FY23: £9.0m) (FY23: £10.2m) (FY23: Nil) Adjusting items - Accounts prepared on Transferred listing IFRS16 i
Slide 7: The backdrop to FY24 was challenging
The backdrop to FY24 was challenging Macro-Economic Cost Headwinds High interest rates Low consumer Anticipated Unforeseen and inflation confidence • National Living and • Freight costs and Minimum Wages supply chain disruption due to Red • Our investments to sea issues drive growth 7
Slide 8: Despite tough consumer environment delivered growth in revenue, driven by stores
Despite tough consumer environment delivered growth in revenue, driven by stores FY24 LFL Sales by Quarter • FY24 Revenue: £282.6m 10.0% Stores Online Total (FY23: £280.1m) 6.4% 4.5% 5.0% 1.6% • FY24 LFL Sales: -0.9% 0.0% 1.2% 0.2% (FY23: +4.2%) Q1 Q2 -0.5% Q3 Q4 -5.0% -3.4% -4.4% • FY24 Store LFL S
Slide 9: Decisive action taken to mitigate pressure on profitability
Decisive action taken to mitigate pressure on profitability • Implemented changes to ways of working in Distribution Centre and store labour models. Cost Base Reset • Moved online fulfilment centre to a more efficient facility. Improved margins and lower costs coming through • Negotiated rent saving
Slide 10: Following challenging Christmas, key focus on improving product margins
Following challenging Christmas, key focus on improving product margins • FY24 Product gross margin rate: 57.3% (FY23: 57.6%) FY24 FY23 (Restated) Variance Variance % of % of Product Margin - £m & Rate £m £m £m % revenue revenue £161.3 £162.1 Revenue 282.6 280.1 2.5 0.9 £157.0 59.3% Cost of goods so
Slide 11: Tighter cost control helped to mitigate headwinds and stabilise profitability
Tighter cost control helped to mitigate headwinds and stabilise profitability FY24 FY23 Restated Variance Variance £m % of revenue £m % of revenue £m % Store payroll (50.2) 17.8 (46.8) 16.7 (3.4) (7.2) Store property and establishment costs (49.3) 17.4 (51.8) 18.5 2.5 4.8 Store PoS & transaction fee
Slide 12: Ended FY24 debt-free and with ample liquidity to support build of stock during peak
Ended FY24 debt-free and with ample liquidity to support build of stock during peak 25.0 Opening to closing cash • Year-end net cash: £1.6m 11.4 (FY23: £10.2m) 20.0 • Comparable 52-week period net 15.0 cash: £6.5m -8.3 10.2 • FY24 stock £31.4m 10.0 -4.3 (FY23: £33.4m) 5.0 • Final dividend for FY24:
Slide 13: Well positioned for FY25
Well positioned for FY25 £8.5m £5m Forecast YE Cash EBITDA Approximately £5m Capex Approximately 13
Slide 14: Strategy Update
Strategy Update
Slide 15: 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 15
Slide 16: Clear brand and proposition to deliver our purpose
Clear brand and proposition to deliver our purpose Our Brand Purpose Our Brand Proposition OUR PURPOSE SPECIALIST Books; Toys & Games; Art & Craft; Stationery To inspire Reading, Learning, Creativity & Play CATEGORIES CONVENIENT 511 stores (UK & Ireland) PROBLEM CHANNELS theworks.co.uk In a world fu
Slide 17: Distinct customer & market position
Distinct customer & market position Our Core Customers Our Market Position Value Specialist Competing on price with full price specialists and specialist knowledge and customer service with the discounters. 17
Slide 18: Good strategic progress made in FY24 & FY25TD
Good strategic progress made in FY24 & FY25TD • New Commercial Director recruited • Customer experience improvements, • Brand evolution work complete informed by analytics #TimeWellSpent being rolled out • Customer engagement and fulfilment trials • Proposition improvements & alignment to • Improved
Slide 19: Strengthened leadership team
Strengthened leadership team Plc Board of Directors Steve Bellamy Gavin Peck Rosie Harry Morley Catherine Fordham Glickman Chair & Chief Snr Independent Independent Non-Executive Executive Chief Financial Non-Executive Non-Executive Director Officer Officer Director Director Process to appoint Cathe
Slide 20: Strategic evolution underway
Strategic evolution underway Significant external interferences Shift in short-term focus Not had a clear run at implementing strategy. Significant FY24 short-term focus shifted to improving profitability. external interferences FY20 to FY23. • Rebuilding gross margin, reducing costs and driving ret
Slide 21: Current Trading & Summary
Current Trading & Summary Gavin Peck, CEO
Slide 22: Current trading in line with expectations
Current trading in line with expectations • 21 weeks ending 29 September 2024 • FY25 YTD sales in line with expectations - LFLs +0.2% - Outperforming wider non-food sector • Operationally well-placed heading into peak Christmas trading period – DC capacity issues addressed • Strong product margin gr
Slide 23: Summary
Summary • “Better, not just Bigger” strategy – transformational opportunity (sales, operations and profitability) • Not had a clear run at implementation, with further challenges in FY24 • Short-term focus shifted to improving profitability - Finished FY24 in line with revised market expectations -
Slide 24: Questions
Questions
Slide 25: 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
Slide 26: Basis of financial information
Basis of financial information • The FY24 accounting period relates to the 53 weeks ended 5 May 2024 and the comparative FY23 accounting period relates to the 52 weeks ended 30 April 2023. • The prior period comparatives have been restated to reflect adjustments wholly related to IFRS 16 Lease accou
Slide 27: Income statement
Income statement FY24 FY23 Restated Variance Variance £m % of revenue £m % of revenue £m % Revenue 282.6 280.1 2.5 0.9 Less: Cost of goods sold (120.5) (118.8) (1.8) (1.5) Product gross margin 162.1 57.3 161.3 57.6 0.7 0.5 Operating costs incl. in statutory cost of sales Store payroll (50.2) 17.8 (4
Slide 28: Capex & stock
Capex & stock FY24 FY23 Variance FY24 FY23 Variance £m £m £m £m £m £m New stores and (1.6) (1.1) (0.5) Gross Stock 28.4 31.3 (2.9) relocations Store refits and Less: provisions (1.9) (1.0) (0.9) (2.3) (3.0) 0.7 maintenance Stock net of IT hardware, software, 26.5 30.2 (3.8) (1.7) (2.4) 0.7 provision
Slide 29: Other areas
Other areas Interest Tax • Majority of interest charge was non- cash IFRS 16 notional interest • Effective tax rate on adjusted profit before tax was 17% (FY23 - • Bank interest payable (facility 6.9%), with the net impairment availability and utilisation charges) reversal resulting in a lower total