The Works, a prominent British retailer specialising in books, stationery, and crafts, has announced the immediate closure of its transactional online shopping website. This strategic decision, described as a move away from a loss-making division, has been met with investor approval, leading to a significant jump in the company's share price on Friday morning.
End of Online Sales Amid Operational Challenges
The company stated that its online shop is "no longer sustainable" after a thorough assessment of various options. The closure will see the website become "non-transactional," meaning it will only display products and guide customers towards in-store purchases, rather than facilitating direct sales.
Bosses cited persistent operational challenges as a key factor in the decision. Over the past two years, the retailer's reliance on two different third-party fulfilment partners has "significantly impacted" its online performance. These difficulties ultimately outweighed any progress made in digital operations, prompting the board to act.
Financial Implications and Store Growth
The shutdown of online sales is expected to incur closure costs of around £2 million. It will also have a "small" negative impact on the cash position in the current financial year and affect a very small number of employees. However, the company emphasised that the move is likely to be cash flow positive in the longer term.
This shift in strategy comes as The Works reports strong trading in its physical stores, with like-for-like sales up 3.3 per cent year-to-date. Earnings are set to meet current forecasts, and the company has hiked its earnings guidance from £12.7 million to £15 million for the next financial year, citing improvements in the core shops business and the removal of online losses.
The retailer is opening five net new stores this financial year and has highlighted the potential to open as many as 100 more sites, underscoring its commitment to expanding its high street presence.
Leadership Perspective on the Strategic Move
Gavin Peck, chief executive of The Works, commented on the decision, stating, "We have reached this conclusion after a thorough assessment of the options available and are confident that focusing on our successful bricks-and-mortar business is the right step to reduce risk, improve operational clarity, and support long-term profitable growth."
He added, "A website that enables customers to browse our products and seek inspiration will help to bring our brand to life and drive customers to our 500 stores."
Following the announcement, shares in The Works lifted by 13.8 per cent on Friday morning, reflecting investor optimism about the refocused strategy.
