AGM Trading Update

RNS Number : 1677G

Card Factory PLC

25 May 2017

 

For release at 7.00am on 25 May 2017

25 May 2017

Card Factory plc ("Card Factory" or the "Group")

Q1 trading update - a good start to the year

Card Factory, the UK's leading specialist retailer of greeting cards, dressings and gifts, is pleased to announce a trading update for the quarter ended 30 April 2017 to coincide with its Annual General Meeting to be held later today. 

Key highlights

·      First quarter like-for-like ("LFL") store sales at upper end of targeted range of +1% to +3%

·      Underlying group sales growth of +6.1% on the basis of an equivalent number of trading days, an improvement on the FY17 full year growth rate of +4.3%

·      Total reported sales growth of +4.9%, including impact of one extra trading day in prior year leap year

·      Continued store roll out with 11 net new stores opened (Q1 FY17: 20); on track for our target of  c50 for full year

·      Trial stores to be opened in Republic of Ireland later this year

·      Strong cash generation with further reduction in net debt

·      Board's expectations for the full financial year unchanged

Recent trading performance

In the first quarter ended 30 April 2017, underlying Q1 Group sales growth was +6.1% after normalising for the impact of last year's leap year with the equivalent prior year period including one extra trading day (Q1 FY18: 89 trading days; Q1 FY17: 90 trading days) - a pleasing improvement on the full year rate of growth of +4.3% delivered in FY17. 

Including the impact of one extra trading day in last year's leap year, total reported first quarter revenue increased by +4.9% (Q1 FY17: +6.5%). 

For Card Factory stores, Q1 LFL sales growth was at the upper end of the target range of +1 to +3%.  

In the first quarter we opened 11 net new stores (Q1 FY17: 20) bringing the total estate to 876 stores as at 30 April 2017.  We remain on track to deliver approximately 50 net new stores in the current financial year, including an increasing number of retail park stores, which are performing well, with overall openings this year weighted to the second and third quarter.  Our trial entry into the market in the Republic of Ireland is progressing well, and we anticipate opening a small number of trial stores later this year in addition to our normal 50 net new stores in the UK.

Revenue from the Card Factory website continues to grow, albeit from a small base.  We have continued to expand and improve the range of card and non-card products available on the website, both personalised and non-personalised, as we target a significant increase in our share of this attractive segment of the market.

The trading performance at Getting Personal has started to improve following recruitment of a new senior team with positive sales growth re-established.  We continue to target Getting Personal revenue growth for the full year in excess of 10%.  

Financial position

The Group remains highly cash generative, driven by its strong operating margins, limited working capital absorption and relatively low capital expenditure requirements.

As at 30 April 2017, before the forthcoming payment of the proposed final dividend for FY17 of £21.5m, net debt had further reduced to £125.4m, before deduction of capitalised debt costs.  This is £10.4m lower than the level reported at 31 January 2017 of £135.8m.

The Board currently anticipates, subject to trading performance, making a further return of surplus cash to shareholders, in line with our stated policy, towards the end of the current financial year.  A further update will be given with our interim results for the 6 months ending 31 July 2017, due for release in late September.

New CFO

We announced in January that our CFO, Darren Bryant, had informed the Board of his desire to retire after eight years with the Group.  In April we announced the appointment of Kris Lee as Darren's successor and we are pleased to confirm that Kris will join the Company as an Executive Director on 3 July.  Following a handover period Darren will retire from the Board and leave the Group on 31 July, at which date Kris will assume the role of CFO.

Karen Hubbard, Card Factory's Chief Executive Officer, said:

"We have had a good start to the year with like-for-like store sales at the upper end of our targeted range.  Our store opening programme remains on track and we are pleased with the performance of this year's openings, including strong initial sales from the increased proportion of openings in retail parks.

"We have also seen sales growth from cardfactory.co.uk and, encouragingly, the sales performance of Getting Personal is starting to improve following recent management changes with the business continuing to target annual sales growth in excess of 10%. 

"Overall, Card Factory remains in a really strong position with a significant number of additional opportunities to further improve the business in the months and years ahead.  The Board's expectations for the full financial year remain unchanged and I look forward to providing further updates as the year progresses."

ENDS

Enquiries

Card Factory plc                        [phone]

Karen Hubbard, Chief Executive Officer

Darren Bryant, Chief Financial Officer

MHP Communications                [phone]

John Olsen                        

Simon Hockridge

Notes to Editors

Card Factory is the UK's leading specialist retailer of greeting cards, dressings and gifts. It focuses on the value and mid-market segments of the UK's large and resilient greeting cards market, and also offers a wide range of other quality products, including small gifts and gift dressings, at affordable prices. Card Factory principally operates through its nationwide chain of over 850 Card Factory stores, as well as through its online offerings: www.gettingpersonal.co.uk and www.cardfactory.co.uk.

The Group's clear strategy is focused on four pillars of growth:

-       continuing to grow like-for-like sales in existing stores;

-       continuing to roll out profitable new stores;

-       continuing to focus on delivering business efficiencies; and

-       increasing penetration of the complementary online market.

Card Factory commenced operations in 1997 with just one store and has expanded its store estate primarily through organic growth into a market-leading value retailer with a nationwide presence. The Group's stores are in a wide range of locations including on high streets in small towns through to major cities, shopping centre developments, out-of-town retail parks and factory outlet centres.

Since 2005, Card Factory has developed a vertically integrated business model with an in-house design team, an in-house printing facility and central warehousing capacity of over 360,000 sq. ft.  This model differentiates the Group from its competitors by significantly reducing costs and adding value to customers in terms of both price and quality, underpinning the Group's motto: "compare the quality, compare the price".

In the financial year ended 31 January 2017, the Group achieved revenue growth of +4.3% to £398.2 million (FY16: £381.6 million) and underlying EBITDA growth of +3.8% to £98.5 million (FY16: £95.0 million) at a margin of 24.7% (FY16: 24.9%).

Cautionary Statement

This announcement is based on information from unaudited management accounts and contains certain forward-looking statements with respect to the financial condition, results of operations, and businesses of Card Factory plc.  These statements and forecasts involve risk, uncertainty and assumptions because they relate to events and depend upon circumstances that will occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements. These forward-looking statements are made only as at the date of this announcement.  Nothing in this announcement should be construed as a profit forecast.  Except as required by law, Card Factory plc has no obligation to update the forward-looking statements or to correct any inaccuracies therein.

 

END

 

 

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