Trading Update

11 January 2018

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

Trading update

A solid Christmas trading period

Card Factory, the UK's leading specialist retailer of greeting cards, dressings and gifts, is pleased to announce a trading update for the 11 months ended 31 December 2017. 

·      Total year-to-date sales growth of 5.9% (11 months ended 31 December 2016: +4.3%)

·      Strong year-to-date like-for-like store sales growth of 2.7% (11 months ended 31 December 2016: +0.4%), with solid performance over the Christmas trading period

·      48 net new UK stores opened in the period, with 50 net new stores expected by the year end

·      cardfactory.co.uk had a strong Christmas trading period from a low base

·      gettingpersonal.co.uk sales performance is broadly flat for the year to date

·      Continued margin pressure leading to expected underlying EBITDA for the year to be in the range £93.0-£95.0m

Recent trading performance

The Group delivered a solid level of sales growth in the Christmas period driven by a combination of like-for-like sales growth and new store roll out.  This has contributed to strong year-to-date like-for-like store sales growth of 2.7% (11 months ended 31 December 2016: +0.4%).

48 net new UK stores were opened in the period, bringing the total UK estate to 913 stores as at 31 December 2017.  In addition, the Group opened six new trial stores in the Republic of Ireland over the period.  Looking ahead to our next financial year ending 31 January 2019, the Group has a good pipeline of new store opportunities and we remain confident of continuing our historic opening rate of approximately 50 net new UK stores per annum.

cardfactory.co.uk, our transactional site, continues to grow strongly from a low base.  Including sales from cardfactory.co.uk, total Card Factory year-to-date like-for-like sales grew by 3.0% (11 months ended 31 December 2016: +0.5%).

Sales performance over the Christmas period at gettingpersonal.co.uk, our online personalised gifting business, was disappointing which has resulted in a broadly flat sales performance year to date. 

Across the Group, like-for-like sales growth has been driven primarily by lower margin non-card categories, such as gifts and dressings, with card sales stable year on year.  Given this, and the previously announced margin pressures being experienced by the Group, the Board currently expects underlying EBITDA for the current year to be in the range £93.0-95.0m.

The Group continues to be highly cash generative.

Karen Hubbard, Card Factory's Chief Executive Officer, said:

"As I approach my second anniversary with the business, it is pleasing to report that Card Factory has traded well through the competitive Christmas trading period with customers once again responding positively to our card and non-card ranges.  As a result, like-for-like store sales have improved in the year to date.

"As we have reported previously, the Group has faced significant cost pressures in the year; these, together with the further change in margin mix given the ongoing out-performance of lower-margin non-card categories, are reflected in our expected outturn. 

"We anticipate that the combined impact of foreign exchange and wage inflation in FY19 will result in £7-8m of additional costs; whilst we have plans to mitigate this impact as far as possible, we recognise that against this backdrop, any EBITDA growth for the year is likely to be limited. Looking further ahead, cost headwinds should ease unless there is a further dramatic shift in sterling.

"We believe that our market leading proposition, underpinned by our unique vertically integrated model, provides our business with significant competitive advantage."

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

                                                cardfactory@mhpc.com

Simon Hockridge / Giles Robinson / Nessyah Hart

Preliminary results announcement

Preliminary results for the year ending 31 January 2018 will be announced on Tuesday 10 April 2018.  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 other quality products, including small gifts and gift dressings, at affordable prices. Card Factory principally operates through its nationwide chain of over 900 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 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 2017, the Group achieved revenue growth of 4.3% to £398.2 million (FY16: £381.6 million) and underlying EBITDA growth of +3.8% to £98.5 million (FY16: £95.0 million) at a margin of 24.7% (FY16: 24.9%).

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.