Online difficulties weigh on festive trading at The Works

(Sharecast News) - Shares in TheWorks.co.uk fell sharply in morning trading on Thursday, despite interim losses narrowing, after it posted a slide in festive sales.

The Works said trading had been "robust" against a "challenging backdrop with continuing subdued consumer confidence".

In-store like-for-like sales at the value chain, which specialises in stationery, toys, books and arts and crafts, rose 1.2% in the 11 weeks to 18 January. However, operational issues at its third-party fulfilment partner meant online underlying sales plunged 51.8%, dragging overall like-for-like sales down 4.2%.

By 0845 GMT, the AIM-listed stock had shed 14% to 35p.

The update was included with The Works' interim numbers, which showed a 0.3% dip in revenues in the 26 weeks to 2 November, to £123.8m. On a like-for-like basis, sales rose 0.3%, with in-store up 4% but online down 36%.

Adjusted losses before interest, tax, depreciation and amortisation narrowed to £1m from £2.8m.

The Works first flagged issues in November with its new online fulfilment provider, which it switched to in September.

It said on Thursday that while it was "disappointed", it had taken "sustained action" to mitigate the impact and was working closely with unnamed provider to deliver a "long-term solution".

It also reiterated full-year guidance, despite the ongoing issues, for adjusted earnings before interest, tax, depreciation and amortisation of £11m.

Gavin Peck, chief executive, said: "The strategic initiatives delivered in the first half of the financial year have been critical in driving a strong performance in-store, and an improvement in profitability year-on-year.

"Along with the wider sector, we have felt the impact of a challenging consumer backdrop.

"However, we continued to see positive response to our excellent value and new products over the festive period."

Theworks.co.uk.