TheWorks.co.uk PLC on Wednesday said adjusted earnings for its recent financial year were in line with its revised expectations, though still down by more than 50%, prompting a dividend cut.

The Birmingham, England-based retailer of arts & crafts, stationery, toys and books also announced a change in finance chief.

Shares were down 8.8% to 29.40 pence on Wednesday morning in London.

Pretax profit fell to £5.0 million in the 52 weeks that ended 30 April 2023 from a restated £14.2 million the year before.

Adjusted pretax profit was £10.1 million, down from £16.5 million, while pre-IFRS 16 adjusted earnings before interest, tax, depreciation and amortisation fell to £9.0 million from £16.6 million. IFRS 16 is an accounting rule governing the treatment of lease obligations.

Revenue rose by 5.8% to £280.1 million from £264.6 million. Stores sales - just under 90% of total sales - rose by 7.5% on a like-for-like basis, but online sales declined by 15%, leaving overall like-for-like sales up 4.2%.

However, costs also increased, with The Works highlighting increases in business rates and freight costs.

The Works declared a final and total dividend for the financial 2023 of 1.6 pence per share, cut by 33% from 2.4p in financial 2022.

Looking ahead, the retailer said trading in the first 17 weeks of financial 2024 have been in line with its expectations, with like-for-like store sales growing by 5.4% and the same online declining by 18%.

The Works said it is ‘comfortable’ with the market forecast of £10.0 million in adjusted Ebitda for financial 2024.

Reviewing the recent year, Chief Executive Officer Gavin Peck said: ‘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 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.’

Chief Financial Officer Steve Alldridge will depart at the end of 2023, replaced by Head of Finance Rosie Fordham. Alldridge has been CFO since June 2020. Fordham joined the company in 2019.

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