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Card Factory PLC (CARD)

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Wednesday 15 November, 2017

Card Factory PLC

Trading Statement

RNS Number : 5125W
Card Factory PLC
15 November 2017
 

15 November 2017

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 2017.

Key highlights

·      Total sales growth of +6.7% (nine months ended 31 October 2016: +4.4%)

·      Continued store roll out with 38 net new UK stores opened (nine months ended 31 October 2016: 46)

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

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

·      Online propositions of gettingpersonal.co.uk and cardfactory.co.uk continuing to grow

·      EPOS operational in all stores

 

Recent trading performance

In the nine months ended 31 October 2017, revenue increased by +6.7% (nine months ended 31 October 2016: +4.4%). The strong first half sales performance has continued in the third quarter, driven principally by growth in lower margin non-card categories.

Eight net new UK stores were opened in the third quarter, bringing a total of 38 net new UK store openings in the year to date. This brings the total number of UK stores to 903 as at 31 October 2017 (31 October 2016: 860). We remain on track to deliver approximately 50 net new UK stores in the current financial year and, in line with previous years, have started to build a solid 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.

Gettingpersonal.co.uk and cardfactory.co.uk continue to grow and attract increased visitor numbers, with the new management teams performing well. 

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 2017, before deduction of capitalised debt costs, net debt totalled £156.0 million (31 October 2016:  £128.6 million), being higher than that reported in the interim results and reflecting the planned build-up of stock for the forthcoming Christmas trading period.

 

The 2.9 pence interim dividend and 15 pence special dividend announced on 26 September 2017 will be paid to shareholders on 15 December 2017.

 

Christmas trading and preliminary results announcements

 

The Group will announce its preliminary results for the year ending 31 January 2018 on Tuesday 10 April 2018, with a short trading statement to be issued in January.

 

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

"We have had good third quarter sales, continuing the momentum seen over the first half of the year, with strong growth in revenue from lower margin non-card categories, such as gifts and dressings.

 

"As previously stated, the business faces ongoing external pressures such as foreign exchange and national living wage, which will continue to impact our margin for the remainder of the year and into FY19, despite the mitigation initiatives we have put in place.

"Nevertheless, we go into the important final quarter with an exciting and extended Christmas offer and remain confident that our quality and value credentials will continue to resonate well with our customers, with the added benefit of EPOS and contactless in every store."

ENDS

Enquiries

Card Factory plc                        +44 (0) 203 128 8100

Karen Hubbard, Chief Executive Officer

Kris Lee, Chief Financial Officer

 

MHP Communications                +44 (0) 203 128 8100

                                                [email protected]

Simon Hockridge / Giles Robinson / Nessyah Hart

 

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 900 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 2017, the Group achieved revenue growth of 4.3% to £398.2 million (FY16: £381.6 million) and underlying EBITDA growth of +3.8% to £98.5 million (FY16: £95.0 million) at a margin of 24.7% (FY16: 24.9%).

 

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.


This information is provided by RNS
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