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The Works slashes outlook over cost-of-living fears this Christmas

·2-min read
Sales in the company’s shops grew last quarter (TheWorks.co.uk/PA) (PA Media)
Sales in the company’s shops grew last quarter (TheWorks.co.uk/PA) (PA Media)

Bosses at hobby retailer The Works are already worried about the impact that the runaway cost of living will have on customers this Christmas, it announced as it slashed the outlook for this year.

The company said it cannot be certain how customers will behave, with inflation expected to peak in the months leading up to the holidays.

Since the start of this year, the outlook for the market has deteriorated, bosses said on Monday.

They pointed to low consumer confidence and rising inflation.

It is not clear how long these market conditions will persist, which creates a heightened degree of uncertainty about how consumers will behave, particularly in the forthcoming Christmas shopping season

The Works

“It is not clear how long these market conditions will persist, which creates a heightened degree of uncertainty about how consumers will behave, particularly in the forthcoming Christmas shopping season, The Works’ most important trading period,” the business said.

Sales will still grow this year, but the problems mean that growth might be more meagre than first thought, it said.

Added to that, high freight costs “are showing little sign of abating in the short term”, the business said.

Its costs are also rising due to hikes in the national living wage.

“In light of this uncertainty, and reflecting its desire to maintain a more cautious approach in these market conditions, the board has materially lowered its expectations in relation to the (2023 financial year) result,” The Works said.

In the most recent quarter like-for-like sales in The Works shops rose 1.4%.

This came as the company was facing a big drop in sales from its website.

Online like-for-like sales dropped nearly 29% in the first quarter of the financial year.

However they are still 40% above pre-Covid levels.

Total sales in the first quarter were 1.3% lower than a year ago.

“Whilst store performance was resilient, online was impacted by trends affecting the industry, including channel shifting (as post-Covid shopping trends normalise) and the challenging consumer environment, which appears to be affecting online sales more than physical stores,” the company said.