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With the news that The Works has delivered the most profitable year in its history, FSP takes a look back at the strategies that have driven its growth over the years.
Founded in 1981, The Works is a leading retailer of discount books, toys, gifts, stationery and arts & crafts, and operates from over 300 stores in high street and factory outlet locations. Despite its track record of profitability, it suffered deterioration in trading in 2007 and was placed into administration in January 2008.
Following its administration and subsequent sale to Endless, The Works embarked on a turnaround plan which included a refocus on improving its product offering, growing store numbers and modernising its store portfolio, as well as strengthening its management team.
These changes paid dividends, as The Works went on to record an improving EBITDA and sales performance year after year. And following the revamp of its website and its best ever Christmas sales in fiscal year 2012, the business was ranked number 7 in the Sunday Times Fast Track 2012 Buyout Track 100, and was ranked number 1 in the Midlands.
In 2013, The Works pioneered a loyalty scheme ‘Together’ across its entire store portfolio, in what was described as a first for the value sector. This scheme has been hailed a success, now boasting over 75,000 members and seen as an important factor in driving growth at the retailer.
It all seems to be going in the right direction for The Works, who for the 53 weeks ended May 1 2016, reported EBITDA of £12.7m from £9.5m in 2015 – a 37% increase year on year. The company grew sales to £154.4m from £117.2m the year before. This was a 9% growth on the previous year, which it attributed to a strong performance in key product categories, the addition of 40 new stores, and the continued growth of the online business which saw The Works develop a click and collect proposition.
The coming year will see The Works open at least 50 stores, with the company stating that the “fundamental principles” that have driven the strong profit growth over the last three years, such as proactive management of its property portfolio with zero loss making stores, strong cost controls and simple operating processes, remaining “cornerstones” of the business going forward.
It will be interesting to see how The Works continues to adapt to an ever-changing retail landscape in order to remain competitive, but for now it certainly seems to have got it right.
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