Value retailer The Works has put its store expansion plans on hold, among plans for “more aggressive” lease renegotiations.
The retailer has not planned any new store openings for the rest of its financial year, but aims to open 20 net new stores in 2021.
“While the UK retail property market remains highly favourable to support our store opening programme, and returns on our new store openings remain strong, we are scaling back our new store opening programme in the near term,” the company stated.
“Reducing our new store openings will also enable us to leverage our position and focus on achieving further rent reductions in the existing estate through more aggressive renegotiation of rents on lease renewals.”
In the 26 weeks ending 27 October, 33 new stores opened and five were closed, bringing the total estate to 525 stores. The retailer said these were across a range of formats, including high streets, shopping centres, concessions and retail parks, and are trading in line with expectations.
Two stores were relocated during the period, and a further net 13 stores were added after the half-year point.
Like-for-like sales were down by 3.6%, while the company made an adjusted EBITDA loss of £4.3m, up on £0.9m in the previous year.
The news comes as chief executive Kevin Keaney steps down after nearly nine years. He will be replaced by chief financial officer Gavin Peck.
Separately, troubled menswear chain Moss Bros has made similar moves to cut back its store openings.
Only one new Moss Bros store has opened during the year to date, while two stores have shut. Another two were relocated. The total estate stands at 128 stores.
The menswear retailer’s average remaining lease length is 28 months to either next break or expiry.
Like-for-like sales were down by 3.2% during the 24 weeks to 11 January. While the company said it has improved its retail gross margin rates, it expects to make a loss before tax of around £1m for its full financial year.
Brian Brick, chief executive officer of Moss Bros, said: “Despite the delivery of progress against our strategic levers, we anticipate the year ahead will continue to be challenging until we see an improvement in consumer confidence and a stabilisation in footfall across UK shopping destinations combined with a re-alignment of occupancy costs to properly balance the costs and rewards of doing business in physical retail stores.”
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