A major high street retailer has announced a major closure in an effort to save 500 stores.
The Works has pulled the plug on its loss-making e-commerce operation with immediate effect, announcing a strategic pivot towards its network of 500 physical retail outlets across the country.
Investors responded enthusiastically to the news on Friday morning, sending shares in the books, stationery and crafts chain soaring by 13.8 per cent.
The retailer confirmed it would maintain an online presence, though the website will become purely a showcase platform where customers can browse products before purchasing in-store.
The Works has announced a major store closure announcement
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The decision marks a significant shift for the high street business as it abandons digital transactions entirely to concentrate on its bricks-and-mortar operations.
Problems with two separate third-party fulfilment partners had severely hampered the online division’s performance over the past two years, the company revealed, with these difficulties ultimately outweighing any digital progress made.
Following a comprehensive review of available options, the board concluded the e-commerce arm was no longer viable.
Winding down the online sales operation will incur approximately £2million in closure costs, with a modest negative impact on cash flow during the current financial year, though the company expects the move to prove cash flow positive over time.
The retailer is taking action to ‘drive customers’ to its 500 stores
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THE WORKSThe Works continues to operate hundreds of stores across the UK
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THE WORKSThe retailer simultaneously raised its earnings forecast for the next financial year from £12.7million to £15million, reflecting both improvements in its core store business and the elimination of online losses.
Chief executive Gavin Peck expressed confidence in the strategic direction, stating: “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.”
The retailer is pressing ahead with expansion plans, opening five net new locations during the current financial year, having previously identified scope for as many as 100 additional sites.
Britain’s high streets have struggled in recent years | PA
Store closures have become the norm in recent years amid changing consumer behaviour and the ongoing cost of living crisis.
Angeline Ong, analyst at global trading platform IG Group, said: “Data from the CBI showed confidence among British retailers has dropped at the fastest pace in five years.
“On top of stagnant consumer demand, these high street names are being hammered by rising taxes, hikes in the national minimum wage, and serious competition from online retailers.
“So, what does this mean for traders? Expect UK-exposed retail stocks to stay under pressure, especially those that were late to offer customers a way to buy easily online.”