Discount retailer The Works is gunning to increase sales by almost 50% in the next three years as it extends its offer beyond its books origins.
The three-year growth strategy follows a strong trading performance in the 12 months to April 30, when like-for-likes including online sales grew 7% and EBITDA surged 47% to £8.2m.
Total sales were up 5.5% to £141m. The Works chief executive Kevin Keaney wants to take that to £200m by the end of 2017.
Keaney outlined a number of initiatives to drive sales including store openings, remodeling the existing estate and online improvements.
He wants The Works to be recognised as a family-friendly general discounter and not a books specialist. Books represent 48% of sales, down from 55% three years ago.
Keaney said: “The rebalancing of our range towards gifts, art and craft and stationery has been key to our strong sales and profit growth.”
The retailer is piloting a new store format including a yellow fascia - instead of the normal blue - featuring TheWorks.co.uk branding. The eight trial shops have a zoned layout and are designed to be more engaging. “We want to make sure The Works is more fun and exciting and to lose the library look,” said Keaney.
The majority of The Works’ 310 shops will be rebranded over the next three years.
The Works aims to build its store estate to 350 by 2017 and to increase its presence within the M25 in particular. Keaney said the retailer is eyeing stores in London’s West End, but a “prudent approach” is being taken.
Keaney said the three-year strategy takes into account changes in shopper behaviour, so The Works aims to launch click-and-collect and a mobile app in the near future.
Online sales represented 7% of revenue, and The Works aims to take the proportion to 15% by 2017. The Works is one of the few discounters with a transactional site, and Keaney said its digital arm is profitable.
The Works sells physical books online but has no plans to sell ebooks yet because its strongest categories - “most notably children’s”, Keaney said - are those that have not migrated to digital.
In a sign of intent, The Works has also hired its first IT director, Tom Scott. He joined last week from B&Q.
The Works will also invest in a CRM system in the next six months so it can better target loyal shoppers. It follows the launch of a loyalty scheme last year.
Keaney said consumers’ thirst for value will remain, and highlighted the continued success of Aldi and Lidl, despite signs that the economy is improving. “Regardless of what happens in the UK economy, that’s set now. People expect value,” he said.
The Works is owned by Anthony Solomon and private equity firm Endless.