The retailer said it will keep the site running to advertise what is being sold in-store
The Works has ceased sales through its online store to concentrate on its physical outlets following losses. Shares in the books, stationery and crafts retailer surged on Friday morning as investors praised the change in strategy.
The retail company announced it has immediately halted sales through its website. Whilst maintaining an online presence, this will become “non-transactional”, focusing on showcasing products for purchase in stores.
The firm said operational difficulties with two separate third-party fulfilment partners had “significantly impacted” its online performance over the past two years, overshadowing any online advancements. As a result, the board evaluated several options for the loss-making division before concluding it was “no longer sustainable”.
Company leaders said that discontinuing online sales will result in closure costs of approximately £2 million. The decision, which is believed to affect a very small number of employees, will have a “small” negative impact on its cash position in the current financial year. However, The Works anticipates the move will be cash flow positive in the long run.
Management reported that the chain continues to experience strong sales in stores, with like-for-like sales increasing by 3.3 per cent so far this year, and earnings expected to meet current predictions.
The company also raised its earnings forecast from £12.7 million to £15 million for the next financial year due to improvements in the core shops business and the removal of online losses. The retailer’s plan involves a concentrated effort to expand its high street store business.
This financial year, The Works is set to open five additional stores, having identified the potential to launch up to 100 more locations.
Gavin Peck, chief executive of The Works, stated: “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.”
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.”
On Friday (March 20) morning, shares in The Works saw an impressive rise of 13.8 per cent.
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