Trading Statement

RNS Number : 3970H

Card Factory PLC

15 November 2018

 

15 November 2018

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 nine months ended 31 October 2018.  

Key highlights

·      Year-to-date ("YTD") group revenue growth of +3.4% (2018: +6.7%)

·      YTD Card Factory like-for-like ("LFL") sales of 0.0% (2018: +3.5%)

·      Continued store roll out with 41 net new UK stores opened YTD and on track to deliver approximately 50 net new UK openings in the full year

·      Card Factory website delivered YTD revenue growth of +70.9% (2018: +44.6%)

·      Getting Personal YTD revenue reduction of 8.9% (2018: +3.8%)    

·      Board's underlying EBITDA expectations for the full financial year remain unchanged at

£89m - £91m

* Comparator data set out in this announcement is for the 9 months ended 31 October 2017

Recent trading performance

In the nine months ended 31 October 2018, group revenue increased by +3.4% (2018: +6.7%).

Third quarter Card Factory store LFL sales of +0.1% improved the YTD store LFL to -0.5%, reflecting an improvement in the performance of our core Everyday Card product category and increased average spend. Card Factory website sales grew +47.3% in the third quarter, bringing YTD Card Factory website growth to +70.9%. Including the strong growth delivered by the Card Factory website, overall Card Factory LFL performance for the quarter was +0.4%, resulting in a flat YTD LFL performance (0.0%).

Sixteen net new UK stores were opened in the third quarter, bringing YTD net new UK store openings to 41 with one new store in Republic of Ireland. As a result, the total number of stores as at 31 October 2018 was 963 including seven trial stores in Republic of Ireland. The business remains on track to deliver approximately 50 net new UK stores in the current financial year and has a solid pipeline of new store opportunities for the next financial year.  

Getting Personal continues to face a market environment defined by heavy discounting and increasing customer acquisition costs. The business is focused on delivering profitable sales via lower cost acquisition channels, and continues to be a profitable contributor to the group.  

Financial position

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

As at 31 October 2018, net debt, before deduction of capitalised debt costs, totalled £172.0 million (2018:  £156.0 million). The £12.2 million increase since the FY19 interim results reflects the planned build-up of stock for the forthcoming Christmas trading period.

The 2.9 pence interim dividend and 5.0 pence special dividend announced on 25 September 2018, amounting in total to c. £27 million, will be paid to shareholders on 14 December 2018.

Christmas trading and preliminary results announcements

The Group will announce its preliminary results for the year ending 31 January 2019 on Monday 15 April 2019. In addition, a post-Christmas trading update is planned for 10 January 2019.

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

"Despite the continuation of challenging high street trading conditions, we delivered positive LFL sales in the third quarter, marking a slight improvement on the LFL performance seen in the first half. This reflected further growth in average spend and improved performance of our redesigned Everyday ranges, in addition to our growing Card Factory online business.

"The business faces reduced, but ongoing, external cost pressures such as national living wage and foreign exchange-related input cost increases; the latter is expected to ease in FY20. We remain focused on mitigating these headwinds with our ongoing programme of business efficiencies.

"Given our new ranges and our seasonal performance to date, we approach our Christmas trading period with confidence.  We also remain positive about the growth prospects for the business over the medium term."

ENDS

Enquiries

Card Factory plc                                                          [phone]

Karen Hubbard, Chief Executive Officer

Kris Lee, Chief Financial Officer

MHP Communications                                                 [phone]

Simon Hockridge / Giles Robinson / Tim Rowntree

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 complementary products associated with card giving occasions. Card Factory principally operates through its nationwide chain of over 950 Card Factory stores, as well as through its online offerings: www.cardfactory.co.uk and www.gettingpersonal.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.

In the financial year ended 31 January 2018, the Group reported revenue growth of 6.0% to £422.1m (FY17: £398.2m) and an underlying EBITDA reduction of 4.6% to £94.0m (FY17: £98.5m) at a margin of 22.3% (FY17: 24.7%).

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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