10 August 2017

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

Trading update

Card Factory, the UK's leading specialist retailer of greeting cards, dressings and gifts, announces its trading update for the six months ended 31 July 2017.

Key highlights

·      Card Factory like-for-like sales growth of +3.1% (H1 FY17: +0.2%), continuing to track positively following the improving trend seen in the first quarter

·      Underlying group sales growth of +6.7% on the basis of an equivalent number of trading days, an improvement on:

o  the prior full year growth rate of +4.3%

o  the underlying first quarter growth rate of +6.1%

·      Total reported sales growth of +6.1%, reflecting the impact of one extra trading day in the prior year

·      Continued expansion of our store network with 30 net new UK stores opened (H1 FY17: 34) - on track for our target of c. 50 for the full year

·      First trial store opened in the Republic of Ireland in July, with a small number of others in the pipeline for this financial year

·      Getting Personal business returned to growth with sales up by +5.0% (H1 FY17: flat)

·      Continued strong cash generation with net debt comfortably within our policy range

·      Board's expectations for the full financial year unchanged

Recent trading performance

We saw good sales performances across all parts of the Group - our store network, our online businesses of cardfactory.co.uk and getting personal.co.uk - as a result of further execution of our four pillar strategy.

Like-for-like sales performance for the Card Factory store network was +3.0% (H1 FY17: -0.1%). 

We have continued to expand and improve the range of card and non-card products available on our websites, both personalised and non-personalised, as we target a significant increase in our share of this attractive segment of the market.  Including the Card Factory website, like for like sales performance of the Card Factory fascia was +3.1% (H1 FY17: +0.2%).

In the first half we opened 30 net new UK stores (H1 FY17: 34) bringing the total UK estate to 895 stores as at 31 July 2017.  We remain on track to deliver approximately 50 new UK stores in the current financial year including an increased number of retail park stores, which are performing well.

Following the opening of our first store, we have now secured further sites to continue our trial in the Republic of Ireland, and will monitor the performance of this small group of stores through the next financial year.

The improved trading performance at Getting Personal is an early response to our actions, including the recruitment of a new senior team, and we continue to target Getting Personal revenue growth for the full year towards 10%.

Cash returns to shareholders

Despite headwinds from foreign exchange movements and national living wage, the Group remains highly cash generative, driven by its strong operating margins, limited working capital absorption and relatively low capital expenditure requirements.

As at 31 July 2017, before deduction of capitalised debt costs, net debt totalled £146.0 million (31 July 2016:  £121.7 million, 31 January 2017 £135.8 million), reflecting strong cash generation during the period notwithstanding the impact of foreign exchange movements and the June payment of the FY17 final dividend (£21.5 million).

Our policy remains to return surplus cash to shareholders and we will provide an update on the quantum and timing of the next distribution with our interim results for the six months ended 31 July 2017, due for release on Tuesday 26 September.

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

"It is pleasing to report that the strong sales performance highlighted in our Q1 announcement has continued into the second quarter, delivering a very good first half both in terms of overall and like-for-like store sales.

"Our store expansion programme remains on track and we are pleased with the performance of this year's openings, including strong sales from the increased proportion of openings in retail parks.

"The Board's expectations for the full financial year remain unchanged and I look forward to providing a further update with our half year results next month."

ENDS

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 8156

Simon Hockridge                       cardfactory@mhpc.com 

Giles Robinson

Nessyah Hart

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 850 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: "compare the quality, compare the price".

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.