Theworks.co.uk Plc · LSE:WRKS
Theworks.co.uk — H1 FY21 Earnings Presentation
22 slides from Theworks.co.uk's earnings presentation, Jan 22, 2021
Slide 1: Interim Results, 26 Weeks ended 25 October 2020
TheWorks.co.uk What will you discover? Interim Results 26 Weeks ended 25 October 2020 22 January 2027 og) Dean! SUNDAY TIMES st 2a Bs atl a ee cS je Say BEST BIG COMPANIES TOWORK FOR
Slide 2: Agenda
Agenda • Highlights Gavin Peck (CEO) • Financial Review Stephen Alldridge (Interim CFO) • Business Review Gavin Peck (CEO) 1
Slide 3: Highlights
BEST BIG COMPANIES 2020 TheWorks.co.uk
Slide 4: Highlights: robust performance against COVID-19 backdrop
• Robust performance against backdrop of COVID-19 − Positive EBITDA for the first half − Positive sales growth (stores and online) outside periods of enforced store closures • Continued progress against strategic objectives – will emerge as a stronger business • Further COVID-19 trading restrictions
Slide 5: Financial Review
BEST BIG COMPANIES TOWORK FOR 2020 TheWorks.co.uk
Slide 6: Positive LFLs throughout period
• H1 Adjusted EBITDA £1.5m vs. (£3.9m) LY (pre IFRS 16) • Positive LFL’s throughout Period LFL sales growth % FY21 FY20 Q1 * 6.1% (2.5%) Q2 12.2% (4.4%) H1 10.6% (3.6%) * Stores and online from 8th week • Growth in EBITDA result driven through: • Strong trading performance • Improved product gross m
Slide 7: Adjusted EBITDA and PBT summary
Adjusted, pre IFRS 16 EBITDA H1 FY21 H1 FY20 Variance • 7.8% drop in revenue reflects stores £'m £'m % closed for c. 27% of the Period Revenue 88.9 96.4 (7.8%) Product gross margin 55.8 60.1 (7.1%) • Margin % improvements and cost savings mitigated some of the lost Other operating costs exc. D&A (66
Slide 8: Sales analysis: LFL during and post lockdown
H1 FY21 H1 FY20 Variance Variance £'m £'m £'m % LFL sales during lockdown 7.5 24.9 (17.4) (69.9%) LFL sales post lockdown 87.9 79.5 8.4 10.6% Total LFL sales 95.4 104.4 (9.0) (8.6%) Sales from new/closed stores 6.0 4.7 1.3 27.7% Total Gross Sales 101.4 109.1 (7.7) (7.1%) Revenue 88.9 96.4 (7.5) (7.8
Slide 9: Product gross margin
Product gross margin FY21 FY20 Var Var £m £m £m % Revenue 88.9 96.4 (7.5) (7.8%) Cost of goods sold 33.1 36.3 (3.2) (8.8%) Product gross margin 55.8 60.1 (4.3) (7.1%) Product gross margin % 62.7% 62.3% 0.4% • Executed plan to significantly reduce discounting compared with H1 FY20 • Strong online dem
Slide 10: Adjusted EBITDA cost analysis
Pre IFRS 16 Adjusted EBITDA FY21 % of FY20 % of Variance Variance analysis £'m revenue £'m revenue £m (%) Revenue 88.9 96.4 (7.5) (7.8%) Cost of goods sold 33.1 37.3 36.3 37.7 (3.2) (8.8%) Store payroll 19.2 21.6 20.6 21.4 (1.4) (6.8%) Store property costs 23.2 26.1 21.7 22.5 1.5 7.1% Other direct c
Slide 11: Capital expenditure
FY21 FY20 Variance £'m £'m £'m New stores and relocations 0.0 2.6 (2.6) Store refits and rebrands 0.1 0.2 (0.1) IT hardware and software 0.3 0.4 (0.1) Web development 0.6 0.4 0.2 Other 0.1 0.5 (0.4) Total capex 1.1 4.1 (3.0) • Refocussed strategy resulted in significant reduction is expenditure on n
Slide 12: Cashflow and dividend suspension
H1 FY21 H1 FY20 Variance £m £m £m Cashflow pre-working capital 0.7 (4.5) 5.2 Working capital 19.3 (7.5) 26.8 Capex (1.1) (4.1) 3.0 Tax paid (0.1) (0.3) 0.2 Interest and financing costs (0.8) (0.1) (0.7) Dividends 0.0 (1.5) 1.5 Cashflow before drawdown of facils. 18.0 (17.9) 35.9 (Repayment)/drawdown
Slide 13: IFRS 16 accounting impact on PBT
IFRS 16 accounting impact on PBT H1 FY21 H1 FY20 £m £m Add back rent charges 12.8 11.5 Depreciation of right of use asset (11.4) (9.8) Loss on disposal of right of use assets (0.4) (0.6) Profit on disposal of lease liabilities 0.5 0.6 Lease liability interest charge (2.4) (1.9) Foreign exchange diff
Slide 14: Business Review
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Slide 15: Four pillar growth strategy
Four pillar growth strategy Optimise | LFL Sales | Accelerate Margin and store estate Growth = ——s multi channel efficiency A Always good quality great value for money
Slide 16: Store estate optimisation and rollout
• New store rollout scaled-back from turn of 2020 – focus on existing estate − Average of c100 lease expiry or break events per annum – opportunity to drive rent savings or, selectively, relocate ‒ Improving supply chain and retail operational efficiencies • Continued active store portfolio manageme
Slide 17: LFL sales growth drivers
• Positive LFL sales growth in H1 and through Christmas (excluding enforced closures) − Stores – strong growth in Average Transaction Values offsetting subdued footfall − Online – increased capacity supporting sales growth of over 100% (outside peak) • Proposition continues to resonate well with cus
Slide 18: Online: transformational year
• Continues to be a key differentiator in the value retail sector • 2020 was a transformational year for our online business − Sales almost doubled (3-5 years growth in 12 months) − Invested to increase capacity during first lockdown and peak 2020 − Online profitability step changed Reduced promot
Slide 19: Margin and cost efficiency
• Cost control engrained in the culture of the business – increased focus in 2020 – Store labour cost efficiencies ‒ Ongoing reduction in property costs ‒ Discretionary costs carefully managed ‒ Government COVID-19 support schemes • Continued improvement in underlying product margins − Better sourci
Slide 20: Summary and outlook themes
• Proposition more relevant than ever • Store portfolio management offers multiple opportunities for profitable growth − Flexibility of existing store estate − New store openings • Well-placed for further digital growth − New web platform delivered − Profitability step-changed − Fulfilment capacity
Slide 21: Summary: robust performance against COVID-19 backdrop
• Robust performance against backdrop of COVID-19 − Positive EBITDA for the first half − Positive sales growth (stores and online) outside periods of enforced store closures • Continued progress against strategic objectives – will emerge as a stronger business • Further COVID-19 trading restrictions
Slide 22: Questions
David Wall dno FAWEUL’ PAUNTIE a7 i = BEST BIG -» COMPANIES TOWORK FOR i if A 2020 TheWorks.co.uk