UK retailer TheWorks plans price hikes to offset rising labor costs

(Reuters) - British arts and crafts retailer TheWorks.co.uk said on Friday it plans to undertake targeted price hikes to counter labour cost increases of about 6.5 million pounds ($8.05 million) expected in fiscal 2026.

WHY IT'S IMPORTANT

The retailer joins a long list of UK firms to flag a surge in labor costs following the anticipated rise in employers' social security contributions and minimum wages announced in the country's budget in October.

The steep rise in wages, which will directly affect around 3 million workers, has pressured British companies to hike prices even in the likelihood of diminishing consumer spending.

BY THE NUMBERS

TheWorks, which sells toys, books and stationery, reported a 1.3% rise in revenue to 124.2 million pounds for the first half of fiscal 2025.

Adjusted core loss narrowed to 2.8 million pounds for the 26 weeks ended Nov. 3, from 8.5 million pounds a year earlier, helped by cost cuts.

The company said a fall in customer spending and disruptions at its third-party operated online fulfillment center weighed on its performance over the holiday season.

WHAT'S NEXT

TheWorks said it is on track to deliver annual profit, in line with market estimates, and expects further profit growth in fiscal 2026.

KEY QUOTE

"We are mindful of the need to navigate fragile consumer confidence and significant cost headwinds... We expect that our action to grow revenue, increase margins and reduce costs will deliver improved results in the remainder of this financial year and in FY26," CEO Gavin Peck said in a statement.

MARKET REACTION

Shares of the company rose as much as 8.3% to 21.26 pence.

($1 = 0.8071 pounds)

(Reporting by Raechel Thankam Job; Editing by Shilpi Majumdar)