The Works AGM trading statement: upbeat tone despite tough backdrop
The Works has kicked off AGM day with a confident trading update for FY26. Despite a challenging consumer backdrop, the retailer says like-for-like sales are up year-to-date and outperforming the wider market. No numbers were given, but the tone is clearly positive and linked to its ‘Elevating The Works’ strategy.
On top of that, management is doubling down on operational improvements before the critical Christmas period. Two big projects – a capacity boost at the Distribution Centre and an online fulfilment switch – are now in place or nearing completion. The Board remains confident in delivering profit in line with market expectations.
Like-for-like sales outperformance, but no figures disclosed
Like-for-like (LFL) sales – a standard retail measure that compares sales from stores and channels open for at least a year – are beating the market so far this financial year. The Works did not disclose the actual LFL percentage, which would have been helpful. Even so, stating outperformance against the wider market suggests both footfall and offer are holding up.
Importantly, management links this result to the ongoing delivery of its ‘Elevating The Works’ strategy. While the statement doesn’t detail the levers, the implication is that product mix, pricing discipline, and improved execution are doing the heavy lifting.
Strategy in action: more capacity and a new online fulfilment partner
Two operational upgrades stand out ahead of peak:
- A new mezzanine level at the retail Distribution Centre has been completed, increasing operational capacity. In plain English, this means more space, more pick faces, and faster throughput in the busiest months.
- The business is in the final stage of transitioning to a new third-party online fulfilment provider. Done well, this can improve delivery speed, reliability, and unit economics for e-commerce orders.
Both moves are about readiness for Christmas, when a lot of The Works’ categories – gifting, crafts, books, games – hit their stride. There is always some execution risk with transitions, but doing this ahead of peak is the right play if the team is confident in its testing and ramp-up.
Profit guidance: aiming for £11.0m pre-IFRS 16 Adjusted EBITDA
The Board says it is confident in delivering FY26 profit in line with market expectations of pre-IFRS 16 Adjusted EBITDA of £11.0 million. That is the only explicit number in today’s update.
Quick refresher:
- EBITDA is profit before interest, tax, depreciation and amortisation – a proxy for underlying operating cash generation.
- Pre-IFRS 16 means the figure excludes lease accounting changes introduced by IFRS 16, which can otherwise inflate EBITDA for retailers with lots of leased stores.
This guidance matters because it signals that management expects to offset “significant cost headwinds” with cost savings and sustained margin growth. It’s a resilience message.
Margins and costs: resilience, but details not disclosed
The Works highlights “ongoing cost-saving activity and sustained margin growth.” That suggests better buying, mix, pricing, or operational efficiencies are sticking. Exact gross margin or cost-saving figures are not disclosed.
The phrase “significant cost headwinds” nods to the reality of UK retail right now, without spelling out the drivers. The key is that the company believes it is “well-positioned” to absorb these and still progress strategically and financially through FY26.
Why this matters ahead of Christmas
For a value-focused retailer, Christmas can make or break the year. Today’s update says:
- The warehouse can handle more volume due to the mezzanine expansion – fewer bottlenecks when the orders pile in.
- The e-commerce operation should be slicker with the new third-party fulfilment partner – a win for service and potentially cost per order.
- Like-for-like sales momentum is in place heading into peak – even if the exact rate is not disclosed.
Put together, The Works is signalling it is match-fit for the holidays.
Key numbers at a glance
| Metric | FY26 YTD / Guidance | Notes |
|---|---|---|
| Like-for-like sales (YTD) | Outperforming wider market | Exact percentage not disclosed |
| Pre-IFRS 16 Adjusted EBITDA (FY26) | £11.0m (market expectations) | Board confident in delivering “in line” |
| Margins | Sustained improvement | No detailed figures provided |
| Cost outlook | Significant headwinds | Mitigated by cost-saving actions |
| Operational capacity | DC mezzanine completed | Increases throughput for peak |
| Online fulfilment | Transition in final stage | New third-party provider |
Dates to note: half-year update on 13 November 2025
We will get the next data point on 13 November 2025, covering the half year to 2 November 2025. That should include hard numbers on like-for-like sales, gross margin, and the early impact of the fulfilment switch. It will also set the tone for the crucial December trading period.
What I’m watching next
- Hard LFL numbers – we know outperformance is there, but the magnitude matters.
- Gross margin trend – confirmation that “sustained margin growth” is continuing into peak.
- Operational KPIs – any colour on fulfilment speeds, online order accuracy, or DC throughput post-mezzanine.
- Cost commentary – how the “significant cost headwinds” are tracking versus plan.
Josh’s take: cautiously positive and operationally focused
This is a tidy, confidence-building statement from The Works. No fireworks, but the right signals: LFL momentum, capacity added, online fulfilment upgraded, and profit delivery in line with market expectations at £11.0 million on a pre-IFRS 16 Adjusted EBITDA basis.
The absence of disclosed LFL figures and margin percentages means we will need the November update to fully validate the narrative. Execution through the fulfilment transition is the swing factor. If the operational upgrades bed in smoothly, The Works looks well placed for a solid Christmas and a steady FY26.
Net: cautiously positive. The story is about controlled execution rather than grand promises – exactly what you want heading into peak trading.
