# Card Factory Plc Robust performance in a challenging consumer environment - Link: https://www.directorstalkinterviews.com/card-factory-plc-robust-performance-in-a-challenging-consumer-environment/412772187 - Published: 2019-04-16T07:44:31+01:00 - Author: Charlotte Edwards **Card Factory Plc** (LON:CARD), the UK’s leading specialist retailer of greeting cards, dressings and gifts, announces its preliminary results for the year ended 31 January 2019 (‘FY19’). **Summary** · Grown market share in volume and value of single cards in a stable card market · Flat like-for-like (“LFL”) sales despite widespread high street footfall decline · Strong seasonal and non-card performance underpinned by design and innovation · Extending store footprint and trialling new routes to market and formats through third party partnerships · FY19 profit in line with expectations after impact of easing cost headwinds · Strong cash generation and robust returns to shareholders **Financial highlights** | Financial Metric | FY19 | FY18 | Change | | Revenue | £436.0m | £422.1m | 3.3% | | Card Factory LFL sales growth* | (0.1%) | +2.9% | | | Underlying EBITDA* | £89.4m | £94.0m | (4.9%) | | EBITDA | £93.6m | £86.1m | 8.7% | | Underlying operating profit* | £78.5m | £83.4m | (5.9%) | | Operating profit | £70.8m | £75.5m | (6.2%) | | Underlying profit before tax* | £74.6m | £80.5m | (7.3%) | | Profit before tax | £66.6m | £72.6m | (8.3%) | | Underlying Basic EPS* | 17.6p | 18.9p | (7.1%) | | Basic EPS | 15.0p | 17.1p | (12.0%) | | Ordinary Dividend Cover | 1.89x | 2.03x | | | Leverage | 1.58x | 1.72x | · Total ordinary dividend per share, including proposed final, maintained at 9.3p( FY18: 9.3p) · A special dividend of 5.0p per share was paid in December 2018 (FY18: 15.0p) · We remain focused on shareholder returns and committed to distributing surplus cash to shareholders; a further return is expected to be made towards the end of the FY20 financial year * See Explanatory note 2 “Alternative Performance Measures” for further information and definitions **Business highlights** Further progress on all four pillars of the Group’s growth strategy: 1. Like-for-like sales · Like for like sales impacted by footfall · Further improvements in card ranges and designs, including new everyday premium ranges · Strong performance in seasonal cards across key occasions · Continued growth in average basket value with further new ranges in non-card offering · Market-leading quality and price position maintained · Utilising EPOS data to enhance product offer and range 2. Continuing new store roll out · 51 net new stores opened in the period, bringing the total store estate to 972( including seven in the Republic of Ireland) · First franchise store opened in Jersey · Strong pipeline of new store opportunities for FY20 3. Delivering business efficiencies · Underlying EBITDA margin of 20.5% (FY18: 22.3%) reflects flat LFL performance and cost headwinds but remains industry leading · Improved efficiency in vertical integration driving savings, particularly through lower printing costs with further opportunities identified for FY20 and beyond · Targeted business efficiencies achieved, increasing in-store productivity and warehouse and supply chain optimisation · Confidence in the ongoing plan with FY20 business efficiencies identified to mitigate easing cost headwinds 4. Development of complementary online sales channels · cardfactory.co.uk sales increased by 56.3% against strong prior year comparatives and was a profitable contributor to the Group · Attracted new customers to the online brand and introduced new products not available in store · gettingpersonal.co.uk sales decline was disappointing; the increasing cost of customer acquisition and promotional led competitor pricing resulted in a substantial reduction in EBITDA in the year. > **Karen Hubbard, Chief Executive Officer, commented:** > “We delivered a robust performance for the year, maintaining flat like-for-like > sales despite a tough consumer environment. Our focus has been on continual improvements > to our customer offer, producing better, more innovative ranges of everyday and > seasonal cards and maintaining our quality and value positioning, while also being > more efficient and driving savings across the business. EBITDA for the year however, > was impacted by lower footfall and Getting Personal’s disappointing performance. > “We continue to look to leverage our unique, vertically integrated model to improve > our competitive advantage and drive margins. We have further initiatives planned > for the current year which will bring further production back to the UK, whilst > also implementing additional plans that will allow an improved focus on customer > service in store. > “New stores remain our biggest growth channel, and we opened a net 51 in the year, > with a good pipeline going forward. We are now also exploring other opportunities > to extend our reach beyond 1,200 stores in the UK and internationally to drive > profitable growth. Encouragingly, some initial trials with Aldi in the UK, in > an Australian retailer, and with a franchise partner in Jersey show that the Card > Factory brand is a footfall driver that has real resonance; we will pursue these > types of opportunities to open new routes to market where we see attractive returns. > “Whilst the new financial year is just two months old, we are satisfied with the > start we have made and are particularly pleased with record seasonal performances > from Valentine’s Day and Mother’s Day. As previously stated, EBITDA for the forthcoming > year is anticipated to be broadly flat year-on-year (excluding the impact of IFRS > 16) in light of various external pressures, but we are confident we are laying > the right foundations for future profit growth, whilst continuing to deliver healthy > returns of cash to our shareholders.” **Preliminary results presentation** A presentation for analysts will be held today starting at 9.00am at UBS Limited, 5 Broadgate, London EC2M 2QS. Those analysts who wish to attend are requested to contact Nessyah Hart of MHP on the number below or at nessyah.hart@mhpc.com. A copy of the presentation will be made available on the Card Factory investor relations website (www.cardfactoryinvestors.com). Share on: