Card Factory PLC Trading Update and Refinancing (3663Z)
May 21 2021 - 1:00AM
UK Regulatory
TIDMCARD
RNS Number : 3663Z
Card Factory PLC
21 May 2021
21 May 2021
Card Factory plc
(" Card Factory " or the " Company ")
Update on trading post re-opening
Completion of successful refinancing
Card Factory, the UK's leading specialist retailer of greeting
cards, dressings and gifts, today announces both an update on
trading post the re-opening of non-essential retail and the
completion of a GBP225m refinancing with its current banking
syndicate.
Trading update
We welcomed our colleagues and customers back into our stores in
England and Wales (12 April), Scotland (26 April), Northern Ireland
(30 April) and the Republic of Ireland (17 May). Initial store
sales performance exceeded both our expectations and the sales
performance realised after reopening following the first and second
lockdowns. Initial strong demand has been satisfied, with store
like-for-like sales for the first 5 weeks marginally down compared
to the same period in 2019.
To date, increased spend per transaction has primarily offset
the reduced retail footfall: customers are shopping less frequently
but buying more. We continue to monitor changes to customer
behavior to meet their needs. Our Everyday Card and party ranges
have performed strongly, with a clear early trend of customers
shopping more evenly during the week.
Sales from the online channels have fallen, as expected, as
customers have also been able to shop in our stores, albeit online
sales are still exceeding pre-pandemic levels, with performance in
line with management expectations.
Refinancing
We have completed a refinancing with our existing commercial
banking syndicate. The increased bank facilities of GBP225m provide
additional liquidity above the original GBP200m it replaces, and is
for the same term through to 24 September 2023 (with provision for
a potential extension). As at 16 May 2021, net debt amounted to
GBP110m (excluding deferrals of approximately GBP40m, substantially
agreed with stakeholders) (16 May 2020 net debt: GBP132.5m). The
new facilities comprise:
-- a GBP100m revolving credit facility (RCF), substantially on
the same terms as the previous RCF, subject to revised financial
covenants, intended to support the business as it returns to
normalised leverage;
-- a GBP75m term loan facility; and
-- in aggregate, GBP50m Coronavirus Large Business Interruption
Loan Scheme (CLBILS) facilities.
The secured facilities provide Card Factory with the necessary
financial resources to focus on its future growth strategy. This
includes strengthening Card Factory's online customer proposition
and the capability and capacity to fulfil sales demand.
The facilities are structured to incentivise an early reduction
of overall debt with fees of up to GBP5m payable if pre-payments
are not made in line with specified dates from 30 November 2021
through until 30 July 2022. Subject to prevailing market conditions
and upon taking independent advice, the Company intends to use its
best efforts to raise net equity proceeds of GBP70m to facilitate
these prepayments. The Company is also permitted, under the terms
of the facilities, to prepay GBP70m using funding from other
subordinated sources. In accordance with the terms of the CLBILS
facilities, restrictions on payment of dividends will apply whilst
the CLBILS facilities remain outstanding. Prepayments shall
discharge the Term Loan facility and the CLBILS facilities
pro-rata.
The financial covenants incorporated in the facilities provide
for (a) total net debt and (b) last 12 months EBITDA, to be tested
monthly until March 2022, following which the covenant tests will
revert to (i) EBITDA to net debt (leverage) and (ii) EBITDA to
interest cover, which are to be tested quarterly. Covenant
thresholds are phased to return to 2.5x leverage and 2x interest
cover by January 2023.
The Company will release the preliminary results for the
financial year ended 31 January 2021 on 8 June 2021.
Darcy Willson-Rymer, Chief Executive, said:
"I am pleased we have secured increased banking facilities,
which afford the Group the headroom required to focus on realising
the growth strategy. In particular, enhancing our card-led
proposition through all sales channels and accelerating the
increase in our capability and capacity to fulfil sales demand via
our online channel, and so capitalise upon the move to online
adopted by more customers over the last year.
"We welcome our colleagues and customers back into our stores,
providing the quality ranges at competitive prices which our
customers have missed whilst stores were closed. As national
restrictions are eased, we continue to prioritise providing a safe
working and shopping environment in all our stores. The strong
trading performance in our stores over the last few weeks reflects
the extensive preparations to maximise meeting our customers' needs
completed by the wider Card Factory team."
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 / Elizabeth Snow cardfactory@tulchangroup.com
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