Shares in TheWorks.co.uk (WRKS:AIM) have nearly tripled year-to-date, rallying 185% to 58.25p on signs chief executive Gavin Peck’s new ‘Elevating The Works’ strategy is delivering a step-change in performance.

Full-year results (22 July) from ‘The Works’, which sells affordable, screen-free activities for the whole family, showed an adjusted pre-tax profit surge from £3.2 million to £4.6 million, supported by cost savings and expanding product gross margins.

While sales were down 2% to £277 million, this reflected a temporary decline in the online channel caused by capacity constraints at Christmas.

However, the company finished the year ended 4 May strongly, with a net cash balance sheet, and has seen continued like-for-like sales and margin improvement in the first quarter of the current year.

This confirms The Works’ refreshed growth strategy, with plans to increase sales to more than £375 million and EBITDA margin to 6%-plus within 5 years, has traction.

Peck says customers are ‘clearly loving our new Spring and Summer product ranges’, and sees scope to expand The Works’ store footprint and grow its brand ‘fame’, thereby attracting even more customers.

With a 73p price target on the stock, Singer Capital Markets believes The Works’ ‘clearer position in the value sector with greater all-year-round appeal focused on screen-free activities for all the family should continue to resonate with shoppers’.

While the retailer is leaning into cost headwinds and fragile consumer confidence, the broker believes ‘driving like-for-like growth and margin expansion should translate into operationally geared pre-tax profit and earnings per share growth, and improved free cash flow.’

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