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For release at 7.00am on 5 June 2019
5 June 2019
Card Factory plc ("Card Factory" or the "Group")
Q1 Trading Update
Positive like-for-like sales performance in a challenging consumer environment
Card Factory, the UK's leading specialist retailer of greeting cards, dressings and gifts, announces a trading update for the quarter ended 30 April 2019 to coincide with its Annual General Meeting to be held later today.
· First quarter total Group sales growth of +6.4%
· Card Factory like-for-like ("LFL") sales +2.3%
· Continued store roll out with 14 net new stores opened (Q1 FY19: 10)
· Strong cash generation
· Board's expectations for the full financial year remain unchanged
Card Factory's total and positive LFL sales performance represents an encouraging start to the year, although in part reflects the weakness in the comparator period. In the context of the continued challenging consumer environment, this performance illustrates the strength of our quality and value offer and the ongoing work to re-design and refresh products. Seasonal card and everyday non-card ranges performed well in the quarter.
The opening of 14 net new UK stores (Q1 FY19: 10) in the quarter brings the estate to 979 stores (including seven stores in the ROI). We remain on track to open approximately 50 net new stores in the current financial year. This includes a number of stores in the Republic of Ireland and on retail parks, in both of which our stores continue to perform well.
CardFactory.co.uk has had a good start to the year with continued revenue growth, driven by the success of new ranges and designs in both personalised and non-personalised products.
The trading performance at Getting Personal has continued to be impacted by a market environment of heavy discounting and increasing customer acquisition cost.
The Group remains highly cash generative, driven by its strong operating margins, limited working capital absorption and relatively low capital expenditure requirements.
As at 30 April 2019, before the forthcoming payment of the proposed final dividend for FY19 of £21.9m (FY18: £21.9m), net debt was £151.3m (30 April 2018: £147.7m), each before the deduction of capitalised debt costs.
Card Factory has seen a positive start to the year. Considering the uncertain macro outlook and the continuation of challenging consumer conditions, and with the key trading periods still to come, the Board expects LFL sales for the year to be marginally positive, with full year profit expectations remaining unchanged.
Karen Hubbard, Card Factory's Chief Executive Officer, said:
"We have had a positive start to the year with like-for-like sales growth despite challenging consumer sentiment and negative footfall on the High Street. We have seen a good customer reaction to our seasonal card ranges over the quarter, with yet again record card sales in volumes and value for both Valentine's Day and Mother's Day. We continue to improve the range and quality of card and non-card options. Our store opening programme remains on track and we are pleased with the performance of recent openings.
"Overall, Card Factory remains in a strong position, continuing to grow market share, with lessening cost headwinds and a platform for medium term growth."
Card Factory plc via Tulchan Communications (below)
Karen Hubbard, Chief Executive Officer
Kris Lee, Chief Financial Officer
Tulchan Communications +44 (0) 207 353 4200
James Macey White / Elizabeth Snow / Amber Ahluwalia firstname.lastname@example.org
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 950 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 UK presence and in the Republic of Ireland. 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: "quality and value for all of life's moments".
In the financial year ended 31 January 2019, the Group achieved revenue growth of +3.3% to £436.0 million (FY18: £422.1 million) and underlying EBITDA decrease of -4.9% to £89.4 million (FY18: £94.0 million) at a margin of 20.5% (FY18: 22.3%).
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.
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