Card Factory Plc (LON:CARD), the UK’s leading specialist retailer of greeting cards, dressings and gifts, announces its trading update for the eleven months ended 31 December 2018.
Key highlights
· Year-to-date (“YTD”) Group revenue growth of +3.4% (2018: +5.9%)
· YTD Card Factory like-for-like (“LFL”) sales broadly flat at -0.1% (2018: +3.0%)
· Continued store roll out with 51 net new UK stores opened YTD
· cardfactory.co.uk delivered YTD revenue growth of +59.1% (2018: 65.8%), reflecting a strong Christmas trading period
· Getting Personal YTD revenue decline of -7.8% (2018: +1.0%)
· Business Efficiency programme remains on plan
· Board’s expectations for underlying EBITDA for the full year remain unchanged at £89m – £91m
* Comparator data set out in this announcement is for the eleven months ended 31 December 2017
Recent trading performance
The Group delivered creditable revenue growth in the festive period driven primarily by our new store rollout, with LFL trading reflecting the continuing weakness in consumer demand experienced across the retail sector in the run-up to Christmas.
Across the estate, Christmas trading remained robust, with LFL sales down -0.5% for the YTD, in line with our quarter three update in November.
Sales from cardfactory.co.uk continued to grow strongly, up 59.1% YTD. The combination of store and online sales, delivered overall Card Factory YTD LFL sales down -0.1% (2018: +3.0%).
51 net new UK stores were opened in the period plus one new store in Republic of Ireland. This brings the total estate to 973 stores as at 31 December 2018, including seven trial stores in Republic of Ireland.
Getting Personal continues to face a market environment defined by heavy discounting and increasing cost of customer acquisition. The business is focused on delivering profitable sales via lower cost acquisition channels and continues to be a profitable contributor to the Group.
The Group continues to be highly cash generative.
Outlook
Assuming a steady state, we anticipate that the foreign exchange headwind should dissipate in FY20. We continue to mitigate a large proportion of expected cost challenges, including National Living Wage and electricity wholesale prices, which will result in £5-6m of additional costs.
In light of the current consumer and macro-economic backdrop, we anticipate that FY20 will be another difficult year.
On a consistent accounting basis (i.e. excluding adjustments in relation to IFRS 16), we expect EBITDA to be broadly flat, based on limited sales growth.
Karen Hubbard, Card Factory’s Chief Executive Officer, said:
“The Christmas trading period was challenging due to lower high street footfall. However, Card Factory performed robustly in this competitive trading period. As a result, like-for-like store sales have remained consistent and in line with our quarter three update in November.
“Although the Group has faced significant cost pressures in the year, these have reduced and we have been able to take mitigating action to maintain robust gross margins.
“Whilst we expect ongoing challenges from the consumer and macro backdrop, we continue to lead the market with our proposition, underpinned by our ongoing investment in our unique vertically integrated model which provides our business with significant competitive advantages.”
