Card Factory Regulatory News (CARD)

24 May 2016

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

Q1 trading update

Card Factory, the UK's leading specialist retailer of greeting cards, dressings and gifts, is pleased to announce a trading update for the quarter ended 30 April 2016 to coincide with its Annual General Meeting to be held later today.

Key highlights

· Total sales growth of 6.5% (Q1 FY16: +7.5%)

· Continued store roll out with 20 net new stores opened (Q1 FY16: 19)

· Strong pipeline of new store opportunities for the remainder of the financial year

· Strong cash generation with further reduction in net debt

· Board's expectations for the full financial year unchanged

Recent trading performance

In the first quarter ended 30 April 2016, revenue increased by +6.5% (Q1 FY16: +7.5%).

As many other retailers have commented, retail footfall trends varied across the first quarter. For Card Factory stores an overall reduction in footfall offset continuing growth in average spend, with Q1 like-for-like sales growth softer than levels recently achieved. In line with the guidance given in our preliminary results announcement in April, we continue to target full year like-for-like sales growth within the 5 year historic range of +1.4% to +3.2%.

Our new store opening programme continues as expected. In the first quarter we opened 20 net new stores (Q1 FY16: 19) bringing the total estate to 834 stores as at 30 April 2016. We remain on track to deliver approximately 50 net new stores in the current financial year.

Total online revenue growth for the quarter was in excess of 10%. As reported in our preliminary results, Getting Personal is facing very strong prior year comparatives (H1 FY16: +24.9%). Revenue growth from the new Card Factory website was strong, albeit from a small base.

Financial position

The Group remains highly cash generative, driven by its strong operating margins, limited working capital absorption and relatively low capital expenditure required for expansion.

As at 30 April 2016, before the forthcoming payment of the proposed final dividend for FY16 of £20.4 million, net debt had further reduced to £110.4 million (before deduction of £0.8 million of capitalised debt costs). This is £13.4m lower than the level reported at 31 January 2016 of £123.8 million (before deduction of £0.9 million of capitalised debt costs).

We continue to believe there is potential for further returns of surplus cash to shareholders in line with our stated policy. We anticipate providing an update on the quantum and timing of such distributions with our interim results for the 6 months ending 31 July 2016, due for release in late September.

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

"Following our record performance last year, we have had a reasonable start to the year. Whilst not completely immune to the weaker consumer confidence seen in 2016, the market for greetings cards in the UK has proven highly resilient in the past and our unrivalled value offer will continue to appeal to a broad range of customers. We remain confident of making further progress this year as we continue to expand our store portfolio and further improve our in store and online proposition. Overall, our expectations for the year remain unchanged.

"Having now taken over as CEO following an extensive induction programme, I remain impressed by the quality of the business and excited by the opportunities that lie ahead. The team is first class, having consistently delivered strong growth in revenue and profits over many years. This growth is driven by a highly differentiated retail proposition that is, in turn, supported by a unique vertically integrated model. My task is to maintain this track record in the years ahead whilst looking to further improve what is clearly a highly successful business already."

ENDS

Enquiries

Card Factory plc +44 (0) 203 128 8100

Karen Hubbard, Chief Executive Officer

Darren Bryant, Chief Financial Officer

MHP Communications +44 (0) 203 128 8100

John Olsen

Simon Hockridge

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 800 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.

Over the last 10 years, 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 2016, the Group achieved revenue growth of 8.0% to £381.6 million (FY14: £353.3 million) and underlying EBITDA growth of +7.7% to £95.0 million (FY15: £88.2 million) at a margin of 24.9% (FY15: 25.0%).

As previously announced, Karen Hubbard commenced her role as Chief Executive Officer on 25 April 2016. Her predecessor, Richard Hayes, continues as an Executive Director of the Group and member of the Board until he retires and leaves the Group at the end of June 2016 following thirteen years service.

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.