The Works sees revenue rebound after ransomware attack closed stores and hit sales

The firm, which has more than 20 shops across Yorkshire and Humber, reported a 5.8 per cent increase in revenue to £280.1m – up from £264.6m in 2021/22.

However, profit before tax was £5m compared to £14.2m, while EBITDA was £9m compared to £16.6m.

It came as the company’s business rates costs increased by £5.8m as Covid-19 reliefs ended.

Performance was also affected by a cyber attack in April 2022 which resulted in five shops being shut temporarily after hackers gained access to its computer systems and caused issues with its tills. The issue also led to delays for online orders.

Chief executive officer Gavin Peck said: “The first quarter was particularly challenging given the residual impact of the cyber security incident, which occurred in March 2022. The action taken to protect the business and rebuild our systems slowed down sales in May and June 2022.

"However, as a result of this one-off event we have now accelerated the implementation of IT upgrades and have even more robust defences in place. Momentum built following our recovery with an improving store LFL sales performance in the second half of the year.”

The Works has opened 14 new stores, which it said are “trading ahead of expectations”, while relocating three shops and closing 13 others. Around £1.4m has been invested in refitting 34 other stores.

Mr Peck added: “The Works delivered a resilient performance in FY23, despite facing some sizeable challenges.

"Revenue growth was driven by our strong portfolio of stores, bolstered by the sector-wide shift of customers returning to shop in-store post-Covid.

"Although inflationary pressures increased business costs and dampened consumer confidence, we ended the year in line with our rebased expectations. FY23 also showcased the enduring appeal of our value proposition.

"I'd like to thank our colleagues who have demonstrated their ongoing dedication to The Works and have continued to show customers how they can read, learn, create and play more on a budget.

"In the first half our focus was on protecting and rebuilding the business, but as the year progressed we were able to make more strategic progress.

"We have developed our brand and customer proposition, ensured that our ranging is aligned with customer demand and improved our store estate.

"We've also taken steps to enhance our online proposition and drive significant operational improvements across the business, the benefits of which we expect to be fully realised from FY24 onwards.

"Looking ahead, the macroeconomic environment remains uncertain.

"However, we are now well positioned to capitalise on strategic opportunities and given the momentum gained in the latter half of FY23 we expect to grow sales and profit in FY24.”

Chair Carolyn Bradley praised Mr Peck’s leadership during a period of challenging economic conditions and the unexpected cyber security incident.

She said: “Growth was delivered despite the business still recovering from a cyber security incident late in the previous financial year and an uncertain macroeconomic backdrop.

"Thanks to Gavin's steady leadership and the action taken to protect the business, the resonance of our value customer proposition and the patience and flexibility of our colleagues, we ended the year on a more positive sales trajectory.

"Going into FY24, we can now confidently say that The Works is a more operationally robust business, with greatly strengthened cyber security, and remains financially strong.”