High street retailer delays covenant crunch

Card Factory has agreed a short waiver from its lenders as it continues its search for a solution to its crisis.

Earlier this month the Wakefield-headquartered high street business warned that as a result of recent and current lockdowns, it expected its covenants would be breached by the end of January.

Its banking syndicate has now provided waivers for those anticipated covenant breaches until February 28.

The agreement gives the cards and gifts retailer more time although its stores are expected to remain closed because of lockdown for that period.

In a statement Card Factory said: “We remain in constructive discussions with our banks, and have agreed a process to continue to explore a range of potential solutions, with scope for further extensions to the waivers as this process continues.”

The retailer had previously said that while its short term cash requirement could be covered within its existing £200m bank facility, it had suffered a significant impact on its trading performance from the November and current national lockdowns.

It expects to report losses of £10m for the 11 months to December 2020, with store sales down 38% – a consequence of being closed for 37% of the available trading days.