Trading Update

RNS Number : 6327V

Card Factory PLC

11 August 2015

 



11 August 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 six months ended 31 July 2015. 

Key highlights

·      Total sales growth of +8.0% (H1 FY15: +8.9%)

·      Like-for-like store sales growth of +2.7% (H1 FY15: +2.6%)

·      Continued store roll out with 36 net new stores opened (H1 FY15: 36)

·      800th store opened during the period

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

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

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

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

·      Board's expectations for the full financial year unchanged

Recent trading performance

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

In the six months ended 31 July 2015, revenue increased by +8.0%, driven by a combination of like-for-like sales growth, new store roll out and further growth in our complementary online activities. 

Like-for-like store sales growth in the first half of +2.7% (H1 FY15: +2.6%) represents performance towards the upper end of the range targeted by management.

Our new store opening programme continues as expected.  In the first half we opened 36 net new stores (H1 FY15: 36) bringing the total estate to 800 stores as at 31 July 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.

We successfully relaunched our Card Factory transactional website in the period and expect to develop a number of options open to us to grow this channel's revenues over the medium term from its current small base.

Cash generation, balance sheet and returns

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

As at 31 July 2015, before deduction of capitalised debt costs, net debt totalled £109.0 million (31 July 2014:  £146.7 million).  The expected increase in this balance from the equivalent figure of £91.9 million reported at the end of Q1 reflects strong ongoing cash generation during the period offset by the June payment of FY15 dividends totalling £23.2 million and the start of the normal working capital outflow relating to Christmas stock build. 

As previously stated, and in line with our capital policy, the Board expects to announce a return of surplus capital at the time of the interim results.  Details will be provided at that time.

In anticipation of this proposed cash return, we have recently amended and extended our existing £200 million debt facility.  This facility, put in place prior to IPO last year, consisted of a 5 year, £180 million senior debt facility and a £20 million revolving credit facility ("RCF").  The new 5 year facility agreement consists of a £200 million RCF, thereby providing greater flexibility and balance sheet efficiency.  The new facility also includes an additional £100m accordion.  As part of this refinancing process, the margin payable under the new facility has reduced by between 0.25% and 0.75%, depending on the leverage within the Group.  At current leverage, the new facility carries a rate of LIBOR +1.00% compared to a rate of LIBOR +1.75% payable under the previous facility. 

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

"It is pleasing to report that the Group traded well in the first half of the current financial year with good growth continuing from the existing store estate and new store roll out programme, as well as our developing online proposition.  We were delighted to open our 800th Card Factory store in Reading, and to relaunch an enhanced transactional Card Factory website.

"We remain confident of our ability to continue to increase market share whilst delivering on all four pillars of our growth strategy."

Card Factory's results for the six months to 31 July 2015 will be announced on 22 September 2015.

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 800 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.

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 (FY14: £326.9 million) and underlying EBITDA growth of 9.6% to £88.2 million (FY14: £80.4 million) at a margin of 25.0% (FY14: 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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