The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 which is part of UK law by virtue of the European Union (Withdrawal) Act 2018. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

10 January 2023

Card Factory plc ("Card Factory" or the "Group")

Trading ahead of expectations; good momentum across the business

Card Factory, the UK's leading specialist retailer of greeting cards, gifts, wrap and bags, announces a profit upgrade alongside its trading update for the eleven months ended 31 December 2022.

Business highlights

·      Sales for the eleven months ended 31 December 2022 of £432.6 million (11 months to 31 December 2021: £337.3 million¹) reflects the continued good momentum within the business alongside the shift of customer spend back towards the high street.

o  Store revenue grew +7.1% on a Like-For-Like² (LFL) basis.

o  Strong Christmas trading driven by improvements in both store transactions and average basket values supported by effective range development and our compelling value for money offer across both cards and gifts. 

o  Customers returning to the high street and impact of Royal Mail strikes saw online sales down 27.6% year-on-year.  cardfactory.co.uk sales remain up significantly in comparison to pre-pandemic levels +85.2% 3Y.

·    Everyday card ranges and complementary categories have continued to perform well with prior work on range expansion and improving availability supporting the positive performance.

·     As a result of the continued trading momentum, the Board now expects that EBITDA for the 12 months to 31 January 2023 (FY23) will be at least £106 million.  This EBITDA would approximate to PBT of around £48 million, which includes £3.5 million of one-off benefits due to the release of CJRS provision and deferred fee accrual release associated with prior refinancing package.  

·      Net debt (excluding lease liabilities) as at 31 December 2022 was £46.5 million (31 December 2021: £60 million).

1 Covid restrictions included store closures prior to 12 April 2020. 
2 The LFL calculation is based on Stores that were trading in both the current year and the comparative period.

Trading update

Performance over the period benefitted from good momentum across the business and the ongoing reversal of lockdown effects as customers continued to return to the high street. This is evidenced by store revenue growing by +7.1% on a LFL basis, with store transactions and average basket values also improving on the previous period. Sales for cardfactory.co.uk were impacted in December by the Royal Mail strikes but the performance remained comfortably ahead of pre-pandemic levels.

Strong seasonal trading in stores over the Christmas period was supported by our range development and value for money offer across both cards and gifts. Christmas trading also benefitted from the agility provided by our vertically integrated model, as well as forward ordering and delivery of Christmas ranges, which underpinned strong availability in stores across the Christmas period.

A strong performance in both Everyday card ranges and complementary categories supported trading over the year to date. Wedding, life moments, milestone and children's ranges were the best performing of the Everyday card range, and all saw double digit LFL growth. The performance in complementary categories was driven by the range expansion work completed in the first half of the year. Confectionery, pocket money toys and wrap and bags were amongst the high growth categories.

We are pleased with the progress we have made on our growth strategy as we continue to focus on becoming a market leading omnichannel retailer of cards and gifts. We have continued the initial roll out of our new model store format, with ten stores now open and generating an uplift to sales compared to comparator stores.  Further conversions of a number of stores are planned for FY24. In September we  launched our Click & Collect trial, which is now live in 85 stores and have seen a positive initial reaction to the service. We continued to expand our complementary categories, launching alcohol, flowers, confectionery, and gift experiences on cardfactory.co.uk. We have also continued work on securing good foundations for future partnership opportunities.

Outlook

Whilst remaining mindful of the challenging economic backdrop, we take confidence in our compelling value for money proposition and the level of ongoing customer demand.

We have continued to successfully manage inflationary pressures during FY23. We are hedged on energy costs until September 2024 and have a currency hedge in place for the majority of our FY24 requirements at rates favourable to the current market. We are monitoring the impact of other cost pressures affecting our sector and will update further in our Preliminary Results.

The Board believes that EBITDA for FY23 will be at least £106 million versus current consensus of £96.9 million.  This EBITDA would approximate to PBT of around £48 million.  The Board is encouraged by the strong trading momentum and remains confident in the long-term prospects of the business.

Our next update will be in our Preliminary Results for FY23 which is scheduled for 25 April 2023.

Darcy Willson-Rymer, Chief Executive Officer, commented:

"We're pleased and encouraged by the continued strong performance of the business.  With delivery of our growth strategy progressing well, it is great to see some of the benefits from this work starting to come through in our financial performance. 

I'd like to thank all our colleagues who have supported these changes and worked tirelessly over the important Christmas trading period.  There is still more work to be done but we are very excited by the opportunities ahead and have confidence in our Opening Our New Future growth strategy."

Enquiries

Card Factory plc                                                                       via Tulchan Communications (below)

Darcy Willson-Rymer, Chief Executive Officer

Kris Lee, Chief Financial Officer

Tulchan Communications                                                        +44 (0) 207 353 4200

James Macey White / Toby Zeal / Ayo Sangobowale                 cardfactory@tulchangroup.com

This announcement 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.