Trading Statement

RNS Number : 2908O

Card Factory PLC

27 May 2015

 

27 May 2015

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

Trading Update

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 2015 to coincide with its Annual General Meeting to be held later today. 

Key highlights

·      Board's expectations for the full financial year unchanged

·      Like-for-like store sales growth within management target range

·      Continued store roll out with 19 net new stores opened

·      Strong pipeline of new store opportunities for the remainder of the financial year

·      Relaunch of Card Factory transactional website (www.cardfactory.co.uk)

·      Further strong revenue growth from Getting Personal (www.gettingpersonal.co.uk)

·      Strong cash generation with further reduction in net debt

·      Planned return of surplus cash towards end of current financial year

Recent trading performance

The Group continues to trade in line with the Board's expectations.

In the three months ended 30 April 2015, revenue increased by +7.5% (Q1 FY15: +8.5%), driven by a combination of like-for-like sales growth, new store roll out and further growth in our complementary online division.  This growth rate is in line with the +7.5% revenue growth delivered in the second half of the year ended 31 January 2015.

Like-for-like store sales growth continues to track in the range targeted by management highlighting the consistency of the Card Factory vertically integrated model, the strength of its market leading position and the robustness of the market in which it operates.  We continued to operate selective pricing strategies in certain locations during the period.  In line with the practice adopted since IPO in May 2014, data on like-for-like sales performance will be disclosed with half year and full year results.

Our new store opening programme continues as expected. In the first quarter we opened 19 net new stores (Q1 FY15: 22) across a wide range of demographic locations, bringing the total estate to 783 stores as at 30 April 2015.  We remain on track to deliver approximately 50 net new stores in the current financial year. 

Our principal online business Getting Personal (www.gettingpersonal.co.uk) continues to perform well, building on its strong performance in the last two financial years.  As highlighted in our preliminary results, Getting Personal will face more challenging comparative figures in the second half of the year but its current direction of travel continues to be very pleasing.

At the end of April, we relaunched the Card Factory transactional website under the new, more accessible, web domain www.cardfactory.co.uk (replacing the previous www.cardfactory.eu.com domain).  This new website utilises the in-house, responsive technology platform developed by the team at Getting Personal and is a significant enhancement to its predecessor, a "white label" site provided by a third party.  Following an appropriate trial period, we will explore various options open to us to grow the online channel's revenues from its current very small base.

Financial position

The Group remains highly cash generative.

As at 30 April 2015, before the forthcoming payment of the interim and proposed final dividends for FY15 totalling £23.2 million, net debt had further reduced to £91.9 million (before deduction of £2.0 million of capitalised debt costs).  This balance is significantly lower than the level reported at 31 January 2015 of £103.6 million (before deduction of £2.2 million of capitalised debt costs).

As reported with the preliminary results released in March, the Board expects to maintain a leverage ratio broadly in the range of 1.0 to 2.0 times net debt to underlying EBITDA.  To the extent there is surplus capital within the business, having considered investment opportunities and other cash requirements, the Board expects to return that capital to shareholders. 

In line with this approach, the Board expects to return capital towards the end of the current financial year.  A further announcement on the anticipated quantum, method and precise timing of the return will be made with our interim results for the 6 months ended 31 July 2015, scheduled for Tuesday 22 September.

Richard Hayes, Card Factory's Chief Executive Officer, said:

"Following on from our record performance last year, we have had a positive start to our new financial year, with consistently strong revenue growth and cash generation and I remain confident that the Group will achieve the Board's expectations for the full financial year.  Our value retail proposition, built on our long-established vertically integrated model, remains highly differentiated, extremely difficult to replicate and, importantly, very attractive to the customer.

"We are also pleased to have further developed our online proposition through the launch of a new Card Factory website, which we are sure will be well received by our customers who will benefit from its enhanced functionality and access to a greater product range."

ENDS

Enquiries

Card Factory plc                        [phone]

Richard Hayes, 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 750 Card Factory stores, as well as through its online offerings: www.gettingpersonal.co.uk and www.cardfactory.co.uk.

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.

Over the last 10 years, 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 2015, the Group achieved revenue growth of 8.1% to £353.3 million and underlying EBITDA growth of 9.6% to £88.2 million (2014: £80.4 million) at a margin of 25.0% (2014: 24.6%).

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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