The Works: Books retailer shuts down its failing online shopping website
Books, stationery and crafts retailer The Works has halted all sales through its online store, which it described as a loss-making division, in a strategic move that saw its shares rise significantly on Friday morning.
The company announced that it would shut down its transactional website immediately, choosing instead to refocus its efforts on its network of physical stores across the UK.
While the online presence will be maintained, it will become “non-transactional” and serve primarily to showcase products and drive customers to in-store purchases.
The group said persistent operational difficulties resulting from its reliance on two different third-party fulfillment partners had “significantly impacted” its online performance over the past two years.
He explained that these challenges ultimately outweighed the progress made in its digital operations.
After considering various options for the struggling division, the board concluded that the online store was “no longer sustainable”, leading to the decision to close the sales function.
Closing online sales will result in closure costs of around £2 million, bosses said.
It added that the deal, which appears to affect a very small number of employees, would have a “minor” negative impact on its cash position in the current financial year.
This move will likely be cash flow positive in the long run, Works said.
Bosses said the chain continues to deliver strong trading in stores, with comparable sales up 3.3 per cent since the start of the year and earnings set to meet current forecasts.
It also raised its earnings forecast to £15 million from £12.7 million for the next financial year, due to improvements in its main store business and the elimination of online losses.
The retailer’s strategy will see it focus on continuing to grow its high street stores business.
The Works is opening five new stores this financial year after highlighting the potential to open up to 100 new stores.
Gavin Peck, chief executive of The Works, said: “We arrived at this decision after comprehensively assessing available options and are confident that focusing on our successful bricks-and-mortar business is the right move to reduce risk, increase operational clarity and support long-term profitable growth.
“A website that allows customers to browse our products and get inspired will help us bring our brand to life and attract customers to our 500 stores.”
Works shares gained 13.8 percent on Friday morning.
