‘BookTok’ trend helps cushion UK retailer’s falling profits
The chain, which has 525 shops in the UK and Ireland, said it had faced ‘sizeable challenges’ over the past year.
Demand for “BookTok” books and low-cost toys and stationery has helped lift sales for chain TheWorks.co.uk, despite seeing its profit shrink amid higher inflation and weaker consumer spending.
The chain, which sells arts and crafts, stationery, toys and books across 525 shops in the UK and Ireland, said it had faced “sizeable challenges” over the past year.
It reported a pre-tax profit of £5 million for the year to the end of April, nearly just a third of the £14.2 million reported last year.
Shares in the retailer slumped by a tenth on Wednesday following the update.
“The economic backdrop was challenging, characterised by high inflation and dampened consumer confidence,” Gavin Peck, chief executive of The Works, said.
“Families have seen incomes and discretionary spending impacted.
“For value retailers like The Works, we believe that sales have been impacted by cost-constrained consumers reigning in their spending, but that this has been balanced, to an extent, by shoppers seeking out the best value.”
For value retailers like The Works, we believe that sales have been impacted by cost-constrained consumers reigning in their spending, but that this has been balanced, to an extent, by shoppers seeking out the best value
The company said its revenues grew by 5.8% to £280.1 million in the latest financial year.
It helped drive up sales by stocking more newly published and popular books by authors such as Colleen Hoover, whose popularity was fuelled by the “BookTok” trend on video app TikTok, and The Gruffalo writer Julia Donaldson.
The value retailer said it also launched new own-brand products such as its “PlayWorks” children’s toy range.
Like-for-like sales grew by 4.2%, driven by in-store shoppers while online sales slumped by 15%.
The Works said it had faced higher business costs thanks to inflation driving up the cost of shipping and energy.
The firm was also struck by a cyber attack in March last year which forced it to close some of its stores the following month and suspend new stock deliveries and online orders for customers.
It said the incident resulted in slower sales in May and June last year, and led it to invest in strengthening its cyber security and IT systems.
Carolyn Bradley, the firm’s chair, said: “The inflationary environment did impact our profit performance, particularly in the first half of the year given rising freight, energy and other business costs.
“However, as a result of these cost pressures easing and an improvement in store sales growth in the second half, we ended the year in line with our revised profit expectations.”
The retailer said it expects to grow its sales and profit in the 2024 financial year.