The Works, a prominent retailer specialising in books, stationery, and crafts, has announced the immediate shutdown of its online sales platform. This strategic decision, which involves closure costs of approximately £2 million, marks a significant pivot away from its loss-making digital division.
Investor Response and Financial Implications
Shares in The Works surged by 13.8% on Friday morning as investors reacted positively to the news. The company stated that the move will have a small negative impact on its cash position in the current financial year but is expected to be cash flow positive in the longer term. Additionally, The Works has raised its earnings guidance from £12.7 million to £15 million for the next financial year, citing improvements in its core shops business and the elimination of online losses.
Operational Challenges and Strategic Review
The decision follows a thorough assessment by the board, which concluded that the online division was no longer sustainable. Operational challenges linked to two different third-party fulfilment partners significantly impacted online performance over the past two years, outweighing any progress made. As a result, the website will become non-transactional, focusing instead on displaying products to drive customers to physical stores.
Impact on Employees and Store Focus
The closure is understood to affect a very small number of employees, with some job losses anticipated. Meanwhile, The Works reported strong trading in its stores, with like-for-like sales up 3.3% year-to-date, and earnings set to meet current forecasts. The retailer plans to open five net new stores this financial year and has identified potential for up to 100 additional sites, emphasising a renewed focus on growing its high street presence.
Leadership Commentary
Gavin Peck, chief executive of The Works, commented: "We have reached this decision 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. 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."
