Covid-19 update

RNS Number : 1237H

Card Factory PLC

23 March 2020

 

The information contained in this announcement is deemed by

the Company to constitute inside information for the purposes of

Article 7 of the Market Abuse Regulation (EU) No. 596/2014

23 March 2020

Card Factory plc

("Card Factory" or the "Group")

COVID-19 UPDATE

Card Factory, the UK's leading specialist retailer of greeting cards, dressings and gifts, today issues an update regarding COVID-19.

Trading

Card Factory had a satisfactory start to the financial year, particularly with regard to seasonal and everyday card sales.  Growth in average basket value enabled us to largely offset the decline in High Street footfall.  Cardfactory.co.uk performed well, reflecting both improvements to the online portal and the positive response to the enlarged range of cards, gift and party products. 

However, in response to COVID-19 we have seen a very material drop in High Street footfall.

COVID-19

The health and safety of our colleagues and customers remains our top priority and there are a number of measures and plans in place to ensure their continued welfare.  The Group continues to monitor the rapidly evolving COVID-19 situation closely.  Whilst all stores remained open for trading on Sunday 22 March, we are reviewing our approach and expect to begin selectively closing stores shortly on a temporary basis. 

Management and other actions

In response to the material changes we anticipate in demand, we are taking a number of mitigating steps to manage our cost base and cash flow.  These actions include:

-  Detailed review of our investment plan across the Group.  Significant reductions in non-essential capex have been identified, with any investments focused on a small number of key projects that remain important to the Group's long-term strategic objectives

-  New store openings have been significantly restricted, and limited to those where we are legally committed to complete.  This stands at seven stores, and these openings will be delayed until the second half of the year   

-  Deferral of replacement equipment in our manufacturing plant  

-  We have taken a number of steps and are in ongoing discussions with landlords to reduce net cash outflow, thereby increasing our short-term financial flexibility.  We will continue to keep this under review

-  Operational spend will be focused on essential maintenance work in the trading stores.  Discretionary operational spend, such as point of sale and marketing spend, travel costs and costs related to distribution and packaging will be closely monitored and limited

-  Considering the likely prolonged impact on consumer demand, the Board will not be declaring a final ordinary dividend for the year ended 31^st January 2020

We note and appreciate the various actions taken by the Government to support businesses and their employees.  The reduction in business rates provides a monthly cash saving of £2.0m, while the deferral of all HMRC payments to the end of June 2020 contributes positively to the short term cash flow.  The announced support for payment of wages for colleagues is welcomed. 

Net debt at the end of February 2020 stood at £137.0m.  Card Factory has access to a £200m revolving credit facility (expiring in 2023) with its current lenders, with whom it has maintained a very constructive dialogue over the past few weeks, regarding the availability of additional funding if required.

Outlook

We remain confident that the long-term demand for cards and gifting remains robust, with people wanting to share sentiment around special occasions. Management remains focused on the delivery of its strategic business improvement initiatives which will ensure that Card Factory is best placed to meet this demand.

Preliminary Results date change

In line with Financial Conduct Authority's most recent guidance, we have consulted and agreed with our Auditors, KPMG LLP to defer our Preliminary Results announcement and the Strategy Update that was scheduled for the same date. We will confirm a revised date in due course.

ENDS

Enquiries

Card Factory plc   via Tulchan Communications (below)

Karen Hubbard, Chief Executive Officer

Kris Lee, Chief Financial Officer

Tulchan Communications   [phone]

James Macey White / Elizabeth Snow / Amber Ahluwalia 

[e-mail]

 

END

 

 

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