Trading Statement

RNS Number : 1426P

Card Factory PLC

15 November 2016

 

15 November 2016

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

Trading update

Card Factory, the UK's leading specialist retailer of greeting cards, dressings and gifts, announces its trading update for the 9 months ended 31 October 2016.

Key highlights

·      Total sales growth of +4.4% (9 months ended 31 October 2015: +7.9%)

·      Continued store roll out with 46 net new stores opened (9 months ended 31 October 2015: 45)

·      Confident of delivering another year of approximately 50 net new openings

·      Good pipeline of new store opportunities building for next financial year

·      Recent management changes at gettingpersonal.co.uk to drive sales and profit growth

·      Board's expectations for full year profit before tax outturn unchanged

Recent trading performance

In the 9 months ended 31 October 2016, revenue increased by +4.4% (9 months ended 31 October 2016: +7.9%).  As referenced in our interim results, first half sales growth in Card Factory stores was softer than levels recently achieved as a result of lower retail footfall.  Whilst weekly sales patterns in the second half to date have continued to vary, we have seen some improvement in sales of everyday ranges in Card Factory stores since the start of October. 

12 net new stores were opened in the third quarter, bringing a total of 46 net new store openings in the year to date. This brings the total estate to 860 stores as at 31 October 2016 (31 October 2015: 809). We remain on track to deliver approximately 50 net new stores in the current financial year and have started to build the pipeline of new store opportunities for the next financial year.  We remain confident of continuing our historical opening rate of approximately 50 net new stores per annum.

Year-on-year sales performance at gettingpersonal.co.uk continues to be flat with improvements in average spend being offset by lower visitor numbers.  We continue to target medium term sales growth of at least 10% per annum for this business, and have recently made several management changes to enable the team to deliver the initiatives required to achieve that aim.  Our other transactional website, cardfactory.co.uk, continues to grow from a low base.

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 31 October 2016, before deduction of capitalised debt costs, net debt totalled £128.6 million (31 October 2015:  £115.7 million), marginally higher than that reported in the interim results reflecting the build-up of stock for the forthcoming Christmas trading period.

The 2.8 pence interim dividend and 15 pence special dividend announced on 27 September will be paid to shareholders on 25 November.

Christmas trading and preliminary results announcements

The Group will announce its preliminary results for the year ending 31 January 2017 on Tuesday 28 March 2017, with a short trading statement to be issued in January.

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

"The general retail environment has remained challenging with adverse footfall trends impacting customer traffic into our stores. We remain wary of the uncertain outlook for consumer confidence, although we are pleased to note that, since the start of October, weekly sales patterns for everyday ranges in our stores have started to improve. 

"We enter the important final quarter with an excellent Christmas offering, both in our card ranges and an expanded choice of seasonal gifts. Whilst it is always difficult to forecast short term footfall trends, we remain confident that the quality and value of our extensive range will continue to appeal to consumers."

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 2016, the Group achieved revenue growth of 8.0% to £381.6 million (FY15: £353.3 million) and underlying EBITDA growth of +7.7% to £95.0 million (FY15: £88.2 million) at a margin of 24.9% (FY15: 25.0%).

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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