Card Factory Plc (LON:CARD), the UK’s leading specialist retailer of greeting cards, dressings and gifts, announced 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.”
