14 January 2021
Card Factory plc
("Card Factory" or the "Group")
Card Factory, the UK's leading specialist retailer of greeting cards, dressings and gifts, announces its trading update for the eleven months ended 31 December 2020.
· Sales for eleven months to 31 December 2020 of £281.4m (FY20: £424.5m)
o Store sales (gross) year-on-year decline of 38.1%, where mandatory store closures prohibited openings for 37.0% of available trading days
o Online continues to perform very strongly: cardfactory.co.uk achieving +137% LFL during the period and gettingpersonal.co.uk achieving +10% LFL
o Sales to trading partners over the period grew by c. 63% compared to the previous year
· Recovery following first national lockdown exceeded board's expectations, building to sustained positive LFL from early October 2020 with the shop estate fully open
· Assuming the current national lockdown for non-essential retailers does not extend beyond 30 April 2021, existing bank facilities of £200m would be sufficient to meet the current requirements.
* FY20 comparator data set out in this announcement is for the eleven months ended 31 December 2019
* Numbers are unaudited.
The British Retail Consortium report that customer footfall in all location types was materially reduced, with national data showing a full year decline of 43.4%, with December retail footfall down 46.1% on the previous year.
Card Factory's sales during the first eleven months of the current financial year were significantly impacted by extended periods of mandatory closure of our stores in compliance with law. This resulted in over one third of available trading days being lost.
Despite this challenging environment, the business built momentum to achieve sustained positive LFL sales of +17.7% from 1 October 2020 to closure of stores across the UK on or before 3 November 2020 (excluding equivalent trading days of enforced closure).
The launch of Christmas ranges was accelerated, as customers shopped the season earlier this year, which contributed to the positive LFL. The November national lockdown halted the momentum and diverted that seasonal trade to essential retailers, which inevitably and frustratingly, impacted the performance of our stores during the key trading month of December.
Whilst our short term cash requirement can be covered within our existing £200m bank facility, we anticipate that current covenants will be breached at the end of January as the significant impact of the November and current national lockdowns are reflected in our trading performance. We continue to have constructive discussions with our banking syndicate.
Despite the unprecedented nature of this year, our aggressive but considered management of costs and cash has resulted in a material reduction in our utilisation of the debt facility, resulting in net debt being reduced to £90m as at 31 December 2020, compared to the net debt of £119m as at 31 December 2019. We would not expect this facility to be fully utilised unless the national lockdown, restricting non-essential retailers from trading, continues beyond the end of April 2021.
Despite initially being given access to Coronavirus Corporate Finance Facility (CCFF), following changes to the scheme rules, we no longer have that opportunity. We are, however, progressing discussions to access supplemental funding options.
With the certainty that all stores will be closed through to the end of January 2021, the Company anticipates revenue for the full financial year of approximately £284m, and a loss before tax of approximately £10m (equivalent to Adjusted EBITDA (excluding the adjustment for IFRS16 for Leases) of c. +£5m)
Until it is clear when we will be able to fully open all stores without risk of further, substantial periods of Government mandated closure, the Company is unable to provide guidance for FY22.
The Company is reviewing timing for release of preliminary results and finalising accounts, taking account of FRC guidance and the practicalities of meeting requirements for the audit whilst complying with government guidelines and will update the market in due course.
Executive Chairman, Paul Moody comments:
"In a year, the like of which none of us have ever experienced before, I am hugely proud of the way in which the Card Factory family has risen to the many challenges faced and want to thank every colleague for their huge commitment.
Throughout 2020 we unwaveringly did all that was necessary to protect our colleagues and customers, making our stores one of the most COVID-secure shopping experiences available. The financial investment has been significant, but critical to enabling us to meet our social responsibility.
We have successfully pursued key strategic aims, including the acceleration of our digital capability, a streamlined and more effective "newness" range cycle, the implementation of a pricing architecture enabling material retail price progression, auto-replenishment and stock management in store, utilising hand-held technology and bringing ESG to the fore in our decision making.
I remain convinced that the Card Factory brand, and quality with value proposition, resonates strongly with customers. Despite the obvious uncertainties in the first half of 2021, I am confident that we have the opportunity to return the business to sustainable profitable growth and will do all that is necessary in the near term to ensure that we can maximise that opportunity."
Card Factory plc via Tulchan Communications (below)
Paul Moody, Executive Chairman
Kris Lee, Chief Financial Officer
Tulchan Communications +44 (0) 207 353 4200
James Macey White / Elizabeth Snow email@example.com
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.