TIDMCARD
RNS Number : 6745M
Card Factory PLC
10 January 2019
10 January 2019
Card Factory plc ("Card Factory" or the "Group")
Trading update
A robust Christmas trading period in a challenging consumer
environment
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 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 GBP89m - GBP91m
* 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 GBP5-6m
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."
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
Simon Hockridge / Giles Robinson / Tim Rowntree
Preliminary results announcement
Preliminary results for the year ending 31 January 2019 will be
announced on Tuesday 16 April 2019. There will be a presentation
for analysts at 9.30am at the offices of UBS, 5 Broadgate, London
EC2M 2QS. Those analysts who wish to attend are requested to
contact Nessyah Hart of MHP on the above number or at
cardfactory@mhpc.com. A copy of the presentation will be made
available on the Card Factory investor relations website
(www.cardfactoryinvestors.com).
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 complementary products associated with
card giving occasions. Card Factory principally operates through
its nationwide chain of over 950 Card Factory stores, as well as
through its online offerings: www.cardfactory.co.uk and
www.gettingpersonal.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: "Trusted
for quality and value to help celebrate everyone's life
moments".
In the financial year ended 31 January 2018, the Group achieved
revenue growth of 6.0% to GBP422.1m (2017: GBP398.2m) and
underlying EBITDA reduction of 4.6% to GBP94.0m (2017: GBP98.5m) at
a margin of 22.3% (2017: 24.7%).
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, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
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of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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