Card Factory, has announced its interim results for the six months ended 31 July 2024. Despite a challenging trading climate group revenue increased by 5.9%. See below for some key points and release:
- Group revenue +5.9%, reflects continued positive momentum in executing our growth strategy
- Gifts and celebration essentials +6.0% LFL, as we progress towards becoming a celebrations destination
- Total store revenue +6.1%, with 15 net new stores opened
- Strategic progress in partnerships post-period, including new multi-year, full-estate agreement with Aldi UK and Republic of Ireland
- Well prepared for key trading period, with 80% of seasonal range new this Christmas
- Expectations for the full year unchanged
Resilient revenue performance with further strategic progress achieved including successful partnerships expansion. Full year expectations unchanged.
Interim results for the six months ended 31 July 2024 (‘HY25’).
Financial summary1
| Financial Metrics | HY25 | HY24 | Change | FY24 |
| Revenue | £233.8m | £220.8m | +5.9% | £510.9m |
| EBITDA | £45.3m | £51.1m | -11.4% | £122.6m |
| Profit Before Tax (PBT) | £14.0m | £24.7m | -43.3% | £65.6m |
| Adjusted PBT2 | £14.5m | £22.1m | -34.4% | £62.1m |
| Adjusted Leverage (exc. Leases)3 | 0.9x | 1.0x | 0.1x | 0.4x |
| Net Debt (exc. Leases) | £74.9m | £71.9m | +4.2% | £34.4m |
| Cash from operations | £17.5m | £36.3m | -51.8% | £118.7m |
| Basic EPS | 3.0 | 5.6p | -46.4% | 14.4p |
| Adjusted EPS | 3.1p | 5.0p | -38.0% | 13.5p |
| Dividend per share | 1.2p | N/A | N/A | 4.5p |
1 For further information and definitions of Like-for-like (LFL) and other alternative performance measures see Explanatory Notes (below) “Alternative Performance Measures (“APMs”).
2 Adjusted PBT excludes impact of one-off items of £0.5 million finance costs relating to amortisation of debt costs as a result of the refinancing completed in HY25 (HY24: £2.6 million gain on purchase of SA Greetings).
3 Adjusted Leverage is the ratio of Net Debt (excluding lease liabilities) to EBITDA less lease related charges which is consistent with our covenant reporting
Business highlights
· Group revenue of £233.8 million in HY25, up by +5.9% compared to HY24, reflects continued positive momentum in executing our growth strategy:
o Strength of performance during the period underpinned by cardfactory like-for-like (LFL)4 revenue growth of +3.7%, driven by our focus on developing our store estate and our quality and value offer. This is ahead of the broader celebration occasions market5 and the non-food retail sector6.
o Gifts and celebration essentials growth of +6.0% LFL was a key driver of revenue growth as we continue to introduce new and expand existing gifting categories, together with a positive performance on card of +1.1% LFL, enabling progress towards becoming a celebrations destination.
o cardfactory.co.uk revenue growth of +8.8% continues to build on the encouraging traction seen in H2 FY24.
o Partnerships performed in line with expectations with total revenue of £6.6 million in HY25 (£6.4 million in HY24), including £3.9 million revenue from SA Greetings.
· HY25 Adjusted PBT was down £7.6 million to £14.5 million, reflecting substantial increases in National Living Wage, plus freight inflation and phasing of strategic investments. As previously guided, the benefit of our strategic investments and robust programme of productivity measures and efficiency savings in FY25 are weighted to the second half of the year and we have already seen these positively impact the cost base.
· Continued strengthening of the balance sheet as a result of positive operating cash generation and a disciplined approach to management of working capital. Net debt increased by £3.0 million in HY25 compared to HY24, which includes payment of a £15.5 million dividend payment in respect of FY24.
· Recommencement of an interim dividend of 1.2p demonstrating our commitment to delivering progressive returns to shareholders and maintaining dividend cover of around 3.0x over the course of the full year.
4 Like-for-like “cardfactory LFL” is defined as Like-for-like sales in Stores plus Like-for-like sales from the cardfactory website www.cardfactory.co.uk;
5 Kantar Worldpanel Plus | Physical Retail data to 4th August 2024
6 BRC-KPMG Retail sales monitor February 2024 – August 2024
Post-period activity: Strategic progress in partnerships
· Multi-year agreement secured with Aldi to be the exclusive everyday greeting card supplier across the full UK and Republic of Ireland estate.
· Entry into the US market secured through a nationwide wholesale retail partnership which will roll out in time for Christmas.
· In advanced discussions to renew a multi-year partnership with The Reject Shop in Australia, including an extension to a full-service model and seasonal range supply.
· In September 2024 we completed the acquisition of Garlanna, a publisher and wholesaler of greetings cards, wrap and gift bags in the Republic of Ireland.
Outlook:
· Trading since the period end has been in line with the first half.
· Preparations for our Christmas season are well advanced with new ranges that leverage our quality and value proposition across cards, gifts and celebration essentials.
· We have a strong track record in maintaining disciplined management of working capital and driving returns against a range of economic backdrops. Whilst macro-inflationary pressures have started to ease in the second half, we continue to manage specific retail impacts.
· There are several factors that are supporting our profit margin performance going into the second half of the year. Approximately half of the margin growth in the second half will be driven by the seasonality of sales. Our robust programme of productivity and efficiency savings will also make a material contribution. In addition, we expect to benefit from margin-enhancing range development and prudent management of operating costs.
· Albeit we are yet to trade through the key Christmas period, the strong topline performance in the first half, combined with our robust actions to mitigate inflationary pressures, means that our expectations for the full year are unchanged.
· Over the medium-term the Board remains confident in seizing the compelling growth opportunity for the business, which will help deliver on our FY27 targets which remain unchanged.
Darcy Willson-Rymer, Chief Executive Officer, commented:
“I am delighted to be reporting further progress against our growth strategy with this resilient underlying performance in the first half of the year. We continue to deliver against our strategic priorities at pace thanks to the commitment and dedication of our colleagues.
During the period, we continued to see strong performance across our growing store estate, with gifts and celebration essentials now a core driver of revenue growth, building on our strength in greetings cards. Together with the exciting partnership initiatives we are announcing today, we are helping more customers in more places celebrate life’s moments.
As we move into the second half of the year and the important Christmas trading period, our expectations for the full year are unchanged and we continue to focus on managing inflationary pressures within the business. Our strategic growth ambitions are underpinned by a robust balance sheet and strong cash flow, alongside our disciplined approach to managing working capital and focus on driving efficiencies and productivity across the business. Moving forward, we believe we are well placed with a strong proposition that resonates with a broad customer base and delivers an unrivalled quality, value and choice offering.”
