Card Factory set to begin closing stores

23 March 2020

High street gift card retailer Card Factory has recorded a "very material drop" in footfall due to the Covid-19 pandemic. The retailer expects to begin selectively closing stores shortly on a temporary basis to protect staff and customers.

In a trading update, the company reported a "satisfactory start to the financial year". Growth in average basket value helped to largely offset the decline in High Street footfall, while performed well.

However, following the Covid-19 outbreak, there had been a "very material drop in high street footfall".

Card Factory has put in place a number of measures and plans to ensure the continued welfare of staff and customers. All stores remained open for trading on Sunday 22 March, but the company is reviewing its approach and expects to begin selectively closing stores shortly on a temporary basis.

Mitigating steps are also being taken to manage cost base and cash flow including significant reductions in non-essential capex and deferral of replacement equipment in its manufacturing plant.

New store openings have been significantly restricted, and limited to those the retailer is legally committed to complete.

Card Factory said the reduction in business rates announced by the government would provide a monthly cash saving of £2m, while the deferral of all HMRC payments to the end of June 2020 will contribute positively to short term cash flow.

The company has also announced that it will not be declaring a final ordinary dividend for the year ended 31 January 2020.

Card Factory added: "We remain confident that the long-term demand for cards and gifting remains robust, with people wanting to share sentiment around special occasions. Management remains focused on the delivery of its strategic business improvement initiatives which will ensure that Card Factory is best placed to meet this demand."