Theworks.co.uk Plc · LSE:WRKS
Theworks.co.uk — The Works — H1 FY2025 Earnings Presentation
29 slides from Theworks.co.uk's earnings presentation
Slide 1: FY25 Interim Results & Christmas Trading Update
FY25 Interim Results & Christmas Trading Update 1
Slide 2: Agenda
Agenda Overview Gavin Peck, CEO Financial Review Rosie Fordham, CFO Strategy Update Gavin Peck, CEO Summary Gavin Peck, CEO 2
Slide 3: Overview
Overview Gavin Peck, CEO 3 iy Time we spen™
Slide 4: Significant operational, financial and strategic progress made
Significant operational, financial and strategic progress made • Brand identity defined, with Time Well Spent strapline and new mission launched • Resilient store trading in challenging consumer environment in H1; online impacted by challenges at third party online fulfilment centre • Significant im
Slide 5: Financial Review
Financial Review Rosie Fordham, CFO 5
Slide 6: HY25 Financial highlights
HY25 Financial highlights Revenue £124.2m Revenue growth +1.3% LFL Sales -0.8% (HY24: £122.6m) (HY24: +3.1%) (HY24: +1.6%) Pre-IFRS 16 Loss before Adjusted -£2.8m tax -£6.9m Net Debt -£8.5m EBITDA (HY24: -£8.5m) (HY24: £-16.5m) (HY24: £-2.5m) Strong product Significant YOY margin growth cost savings
Slide 7: The retail backdrop has remained challenging
The retail backdrop has remained challenging Retail environment Ongoing cost headwinds Fragile consumer Non-food retail • National Living and Minimum Wages confidence and spend sector LFL decline • Freight costs (1) • Business rates -1.3% • Employers’ NI contributions (1) British Retail Consortium d
Slide 8: Sales performance ahead of non-food retail sector
Sales performance ahead of non-food retail sector HY25 LFL Sales by Quarter • HY25 Revenue: +1.3% to £124.2m (HY24: £122.6m) The Works - Total LFL Q1 Q2 • HY25 Total LFL Sales: -0.8% 0.0% -0.2% (HY24: +1.6% ) -0.4% -0.3% -0.6% -0.8% • HY25 Store LFL Sales: +0.9% -1.0% -0.8% Represent c.90% of total
Slide 9: Strong product margin growth
Strong product margin growth • HY25 Product gross margin rate growth of £80.0 HY24 Margin rate 57.2% 220bps to 59.3% (HY24 : 57.2%) 77.0% COGS saving 1.1% Reduced clearance 0.6% FX - estimate 0.8% £73.7m 72.0% Freight -0.4% HY25 Margin rate 59.3% £70.1m 67.0% £66.9m 62.0% 59.3% 57.2% 56.3% 57.0% £60
Slide 10: Decisive action drove significant improvement in profitability
Decisive action drove significant improvement in profitability H1 FY24 EBITDA (8.5) • Increased Product Margin - Negotiated Additional margin from year-on-year sales with suppliers and introduced more increase 0.9 targeted promotional activity. Higher product gross margin percentage 2.7 • Moved onli
Slide 11: Improved stock position and net debt as expected
Improved stock position and net debt as expected Summary cashflow HY25 HY24 Variance • HY25 stock £51.7m £m £m £m (HY24: £56.1m) Operating profit (4.4) (14.1) 9.7 Other operating cashflows (0.2) 5.3 (5.4) • Year-end net debt: £8.5m Net movement in working capital Net Cash from Investing Activities (
Slide 12: Good start to H2 trading, with momentum building
Good start to H2 trading, with momentum building (11 weeks ended 19 January 2025) Product Total LFL sales Store LFL sales Online sales margin growth -0.9% +1% -14.9% +190bps YOY * Compiled market forecasts 12
Slide 13: Well positioned to meet FY25 market expectations
Well positioned to meet FY25 market expectations £8.5m £4m Forecast FY25 EBITDA Forecast FY25 Cash Approximately £5m FY25 Capex Approximately 13
Slide 14: Expect to offset cost headwinds & deliver profit growth in FY26
Expect to offset cost headwinds & deliver profit growth in FY26 Actions being taken Cost headwinds Expect to deliver • Strategic initiatives • £4.5m NLMW • EBITDA growth to drive sales growth increases • Product margin • £2.0m increase in improvements employer NI contributions • Significant cost red
Slide 15: Strategy Update
Strategy Update Gavin Peck, CEO 15
Slide 16: Continuing to fulfil our purpose and establish our clear brand positioning
Continuing to fulfil our purpose and establish our clear brand positioning 16
Slide 17: Progress made in 2024
Progress made in 2024 Brand project completed Ongoing store portfolio optimisation Ongoing evolution of product proposition Completed rollout of new EPoS software Significant product margin growth Strengthened leadership Cost reduction action yielding team in place results Strategy r
Slide 18: New Strategy - Elevating The Works
New Strategy - Elevating The Works Our Ambition “The favourite destination for affordable, screen free activities for the whole family” Our 5 Year Financial Goals Sales in excess EBITDA margins of of £375m at least 6% Our Strategic Drivers 18
Slide 19: Overview of strategic drivers
Overview of strategic drivers The opportunity: The opportunity: The opportunity: Customers continue to demand increased Continue to offer customers great value The Works is loved by its core customers, convenience – a great opportunity for our and deliver sustainable profit margins by but known and
Slide 20: Multiple levers support growth in sales to £375m+
Multiple levers support growth in sales to £375m+ Existing channel growth: £75m+ £375m+ Online and Multi- Store space channel CX optimisation Improved in-store All year- execution round Increased proposition +£25m spend from FY30 New existing Sales customers customers c.60 net new stores FY25 Sales
Slide 21: Action to drive EBITDA margin improvement
Action to drive EBITDA margin improvement LFL store sales growth on a largely fixed cost c.200bps base product margin £5m+ improvement reduction in EBITDA margin of at operating cost base least 6% supported by Reduced Ongoing cost to serve optimisation of ratio through store portfolio growth in Aver
Slide 22: Summary
Summary • Good progress made in H1 FY25 • Resilient store trading in challenging consumer environment • Significant improvement in H1 profit – on track for market expectations in FY25 • Further profit growth expected in FY26 – proactive action being taken to mitigate significant cost headwinds • New
Slide 23: Questions
Questions 3 iy Time we spen™
Slide 24: Appendix
Appendix 24
Slide 25: Basis of Financial Information
• The prior period comparatives have been restated to reflect adjustments Basis of Financial wholly related to IFRS 16 Lease accounting. Information • Adjusted profit figures exclude adjusting items which comprise non-recurring costs and adjustments with respect to the IFRS 16 accounting standard. 2
Slide 26: Tight cost control and improved ways of working mitigates significant cost headwinds
Tight cost control and improved ways of working mitigates significant cost headwinds HY25 HY24 Restated Variance Variance £m % of revenue £m % of revenue £m % Store payroll (24.6) 19.8 (24.8) 20.2 0.2 0.6 Store property and establishment costs (24.4) 19.7 (25.4) 20.8 1.0 4.0 Store PoS & transaction
Slide 27: Income Statement
Income Statement HY25 HY24 Restated Variance Variance £m % of revenue £m % of revenue £m % Revenue 124.2 122.6 1.6 1.3 Less: Cost of goods sold (50.5) (52.5) 2.0 3.8 Product gross margin 73.7 59.3 70.1 57.2 3.6 5.1 Operating costs incl. in statutory cost of sales Store payroll (24.6) 19.8 (24.8) 20.
Slide 28: Capex & Stock
Capex & Stock HY25 HY24 Variance HY25 HY24 Variance £m £m £m £m £m £m New stores and relocations 0.7 0.6 0.1 Gross Stock 42.9 50.5 (7.7) Store refits and maintenance 0.7 1.6 (0.9) Less: provisions (2.5) (1.7) (0.8) IT hardware, software, projects 0.8 0.9 (0.1) Stock net of provisions 40.4 48.8 (8.4)
Slide 29: This presentation is being made only to and directed at: (a) persons who have
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, and other pe