Card Factory FY21 Full-Year Results - 10 June 2021
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Card
Factory
FY21 Full-Year
Results
10 June 2021
Celebrate life’s moments
Agenda
01 Introduction Darcy Willson-Rymer
02
Financial Performance &
Kris Lee
Business Update
03 Outlook Darcy Willson-Rymer
04 Q&A Darcy Willson-Rymer & Kris Lee
1
Section 1 Introduction Darcy Willson-Rymer 2
Views after my first three months…
An exciting time to join Card Factory
Positive first impressions
Opportunity to do and mean more for our customers
…and my aspirations for Card Factory
Strengthening the brand and customer experience
Deliver great products at excellent value, conveniently
Be recognised as a rewarding and responsible business
3
Solid platform in place from which to take Card
Factory forward
Powerful brand Large and stable market Business model, with
proposition that with clear opportunities vertical integration, offers
resonates with for growth – majority of distinct and valuable
customers and sales still made in physical competitive advantage
colleagues stores
Opportunity to become an
Strong culture across
omnichannel business that
the business, and an
puts quality and value cards
excellent operational
in the hands of customers
management team
wherever they want them
4
Demonstrated resilience through Covid-19 • Priority throughout to look after colleagues and customers’ welfare • Trading recovered consistently well after lockdowns 1 and 2 • Agile response to meet changing trends in demand in store and online • Good online progress with developing the online platform • Successful refinance post-year end provides sufficient resources for future growth 5
Section 02 FY21 Financial performance and business update Kris Lee 6
Financial summary
FY21 FY20 YoY
Revenue £285.1m £451.5m (36.9%)
c.5 month store closures spanned key seasonal events
Card Factory LFL 1
0.1% (0.5%) 0.6 ppts including Mother’s Day and Christmas
Card Factory Store LFL1 (2.4%) (0.7%) (1.7 ppts)
High growth in Card Factory online and Getting Personal
Stores 1,016 1,022 (6) websites, particularly during non-essential store closures
Card Factory Online growth 135.3% 14.8% 120.5 ppts
Partnerships with The Reject Shop (TRS) and Aldi
Retail Partnership Revenue £5.6m £3.1m 83.3% progressing well
Underlying EBITDA £47.0m £125.9m (62.7%)
LFL sales reflect customers shopping less but buying more
Underlying Profit before Tax (£15.2m) £67.2m (122.6%)
Underlying basic EPS (3.7) pence 15.7 pence (123.6%) £4.7m increase in stock provision additional to PBT
guidance (Jan 2021)
Total ordinary dividend (per share) - 2.9 pence (100.0%)
Capex £7.4m £14.5m 48.9% Financial targets to FY25 will be adjusted to reflect Covid
impact
Net Debt (ex lease liabilities) £107.7m £143.1m 24.7%
Leverage (ex lease liabilities) 2.3 x 1.1 x
1 LFLs for store sales include only the equivalent 55% of the year that Card Factory stores were open for
trading in FY21 v 20; online LFL is full year vs full year
7
LFL sales
Post Lockdown 1 stores-only LFL steadily Total Card Factory LFL Performance
recovered from -25% to +2% by the start of October
Average basket spend was +25% over the
period to October 2.8% 2.9%
Transactions were -43% LFL and increased to
-20% over the same period
Post Lockdown 2 saw similar recovery patterns;
stores-only LFL steadily recovered from +2% to
+18% with seasonal sales condensed into a shorter
Christmas trading period
0.6%
Average basket spend was +29% LFL and 0.1%
(0.1)%
remained consistent through to closure (0.5)%
Transactions were -27% LFL and increased to
-17% over the same period
FY16 FY17 FY18 FY19 FY20 FY21
8Divisional Analysis
Stores FY21 FY20 YoY Online FY21 FY20 YoY
Revenue £251.9m £429.0m (41.3)% www.cardfactory.co.uk £11.1m £4.7m 135.3%
Consolidation and evolution of the store portfolio in line with changing www.gettingpersonal.co.uk £16.5m £14.7m 12.2%
shopping habits: 15 unprofitable stores closed and 9 new stores opened in Total online revenue £27.6m £19.4m 42.0%
out-of-town retail parks resulting in net 6 store reduction to 1,016 stores at
year end
Traffic was up 27% & Conversion Growth 1% in the year
We anticipate future store openings to reflect a gradual shift to retail parks,
with increased focus on the existing estate Improved offering with new digital platform & Mobile app launched in
January 2021
Commercial initiatives delivered incremental sales through targeted price
increases and range reviews Ongoing costs of customer acquisition and promotional-led competitor
pricing
Mother’s Day, Father’s Day and Christmas Day all heavily impacted by
lockdown store closures Fulfilment capacity constraints limited sales in peak seasons
Data-led insight to ensure ranges tailored to customer demand in each store Partnerships FY21 FY20 YoY
location beginning to show benefit
Revenue £5.6m £3.1m 83.3%
Increased total locations from 869 to 894
Strong Aldi performance; TRS & Matalan impacted by Covid-19
Ongoing Matalan trial
Franchise arrangements in Jersey, Guernsey and Gibraltar performing well,
and a fourth franchise opened on the Isle of Man in Sept 2020
9Margins
COGS: FY21 % FY20 %
- Product COGS (card and non-card) improved by 0.3 ppts FY21 of FY20 of YoY
at constant currency; Revenue Revenue
- Stock provision increased by £18.1m
COGS £116.9m 41.0% £152.7m 33.8% (7.2 ppts)
Store wages:
- Underlying increase driven by NLW; Store Wages £59.7m 20.9% £87.7m 19.4% (1.5 ppts)
- Net of £27.5m CJRS support Store Property Costs £9.6m 3.4% £26.5m 5.9% 2.5 ppts
Other direct expenses: Other Direct Expenses £18.3m 6.4% £22.9m 5.1% (1.3 ppts)
- Ratio to sales impacted by non-variable property and
other store costs Cost of Sales £204.5m 71.7% £289.8m 64.2% (7.5 ppts)
- Largely mitigated by reduced external storage costs
Operating Expenses £33.6m 11.8% £35.8m 7.9% (3.9 ppts)
- Government support through rates relief £18.1m
Underlying EBITDA £47.0m 16.5% £125.9m 27.9% (11.4 ppts)
Operating expenses:
- Full year costs for new warehousing facilities, offset by
savings in storage costs within Other direct expenses;
- Further investment in IT infrastructure and Online
support, including new platform
Rents fully accrued on deferred payment terms
10Free cash flow
FY21 FY20 YoY
Profit before tax (£16.4m) £65.2m (£81.6m)
Net finance expense £8.9m £8.4m
Depreciation, amortisation and IFRS16 asset impairments £53.3m £52.8m
Loss on disposal, share based payments & hedging reserve £0.7m £0.4m
Operating cash flow before working capital £46.5m £126.8m (£80.3m)
Net working capital movement £33.4m (£2.0m)
Corporation tax (£6.3m) (£14.6m)
Capex (£7.5m) (£14.5m)
Disposal proceeds £0.5m £0.4m
Lease liability payments (£22.1m) (£41.0m)
Net interest paid (£8.4m) (£8.0m)
Free cash flow £36.1m £47.1m (£11.0m)
Dividends - (£48.9m)
Repayment of borrowings (£25.6m) -
Net cash flow £10.5m (£1.8m) £12.3m
11Underlying cashflow & Net debt
FY21 FY20 YoY
Net Debt (ex lease liabilities) £107.7m £143.1m £35.4m
Timing benefits in FY21:
VAT deferral £19.0m
Property deferrals £21.0m These 2 timing benefits, totalling £40m,
Total £40.0m will fully unwind during FY22
Underlying Cash Outflow in FY21 (£4.6m)
12Capex FY21 capex
FY21 FY20 YoY
Capex remains tightly controlled to protect the
One-off strategic projects
business
HHTs – stock take terminals £1.1m - (£1.1m)
Continued key strategic investments to support 5 year
Vertical integration £0.6m £4.1m £3.5m plan including:
Web platforms and mobile app £1.4m £2.0m £0.5m – ERP implementation
– Supply chain technology
Commercial initiatives / other £0.4m £0.9m £0.6m
Ongoing investment in store estate
Supply chain technology £0.7m £0.7m (£0.0m)
EPOS & ERP £0.8m £0.0m (£0.8m)
Sub-total £5.0m £7.7m £2.7m FY22 guidance
Recurring Capex anticipated to be £10m - £13m in FY22
New stores £1.2m £4.1m £2.9m A more rationalised capital programme than presented at
CMD, but continued careful prioritisation of key initiatives
Existing stores & Covid-safe £0.6m £0.7m £0.2m important to the Group’s long-term strategic objectives,
Relocations £0.1m £0.7m £0.6m including:
IT recurring £0.6m £0.7m £0.0m – Ecommerce platforms
– Boosting online fulfilment capacity
Other - £0.6m £0.7m – SAP implementation phase 1 progressing well to
Sub-total £2.5m £6.8m £4.4m launch this year
Total capex £7.4m £14.5m £7.1m Postponement of a proportion of the new store roll out
and relocation programme
13New £225m debt facilities agreed May 2021 Capital investment tightly controlled
Revolving Credit Facility of £100m, and focused on key projects that
remain important to the Group’s long-
Liquidity
maturing in September 2023 (with provision
for potential extension) term strategic objectives
£75m Term Loan and £50m CLBILS
update Replacement covenants from May 2021 to
March 2022:
The Board intends to prioritise de-
leveraging the business
- Total net debt* (to March 22)
The focus is on maintaining a capital
- LTM underlying EBITDA* (to March 22)
structure that is conservative yet
- Interest Cover (from April 22)
efficient in providing long-term returns
- Leverage (from April 22)
to shareholders
Other agreed terms:
The Group’s Capital Policy is under
- Equity distribution prohibited until Term
review as trading conditions become
Loans and CLBILS repaid
clearer
- Best efforts to raise £70m net equity by
July 22, or alternatively to prepay £70m * On a pre-IFRS 16 basis
using funding from other subordinated
sources
FY22
FY22 has suffered from store closures for Given the uncertain economic backdrop,
the first 2½ months, and is a period for the further financial guidance will be given
business to stabilise once trading performance has stabilised
guidance
and can be assessed
Further periods of mandatory store closure
may be imposed; we are prepared to
14 protect the business, should that ariseSection 03 Outlook Darcy Willson-Rymer 15
Five year strategy to grow the business
launched in 2020
Helping customers celebrate their life moments –
Affordable and available for everyone. Key Priorities
01 Winning card-led retail proposition Develop and Strengthen
optimise the online
store estate proposition
02
Available in more places, however
customers shop
Build scale Create platform
through for sustainable
partnerships growth
03
Advantaged, robust and scalable central
model
16Update on current trading • Store closures in first 2.5 months of FY22 spanning Valentine’s and Mother’s Days • Strong initial pent up demand has settled with materially lower footfall but increased average basket values • Online sales reduced in line with reopening, encouragingly ahead of pre- pandemic levels • Continued focus on everyday and range updates and delivering successful 2021 Father’s Day and Christmas • 2 year LFL from April 2021 reopening to 30 May 2021 was –2.9% • Card Factory transaction volumes in line with BRC national footfall performance over the same period 17
Solid platform in place from which to take Card
Factory forward
Powerful brand Large and stable market Business model, with
proposition that with clear opportunities vertical integration, offers
resonates with for growth – majority of distinct and valuable
customers and sales still made in physical competitive advantage
colleagues stores
Opportunity to become an
Strong culture across omnichannel business that
the business, and an puts quality and value cards
excellent operational in the hands of customers
management team wherever they want them
and growing market share
18Section 05 Q&A Darcy Willson-Rymer & Kris Lee 19
Thank you
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