Card Factory reveals intention to float
GREETINGS card retailer Card Factory has announced its intention to float on the London Stock Exchange.
In an announcement this morning, the group said it plans to expand from its current 733 stores up to around 1,200 over the next ten years. It is expected that admission will take place in May and according to reports earlier this year, the initial public offering could value the discount retailer at more than £700m.
The budget card retailer was founded in Wakefield by husband and wife team Janet and Dean Hoyle in 1997. Private equity house Charterhouse bought Card Factory for £350m in 2010 and hired Goldman Sachs to explore a sale last year, but talks came to nothing.
Today, Card Factory said it sold more than 285m cards in the financial year to the end of January 2014. In that year, the group achieved revenue growth of 9% to £326.9m and underlying EBITDA growth of 9.2% to £80.4m.
CEO Richard Hayes said: “Since opening our first store in 1997, we have firmly established Card Factory as the UK’s leading specialist retailer in the greeting cards market. The scale, resilience and continued growth of this market reflect the fact that the giving of physical cards is and will remain ingrained in UK culture. In addition our vertically integrated model, comprising in-house design, production and retail, gives us clear differentiation and allows us to provide exceptional value and quality for our customers while delivering best-in-class EBITDA margins.
“The success of our model is demonstrated through our track record of profitable growth, which includes unbroken like-for-like revenue growth in each year since our first store was opened.
“Our store roll-out strategy is well proven, with an average of 50 new store openings per annum over the past ten years, and we see the potential for significant further store portfolio expansion in the UK and Republic of Ireland over the coming years. We also see the opportunity to gain a greater share of the online market for personalised cards and gifts through our existing presence, gettingpersonal.co.uk.
“In recent years and under Charterhouse’s ownership, we have invested substantially in our business infrastructure to create a robust platform to support our future growth plans. Combined with our consistently strong cash generation, this puts us in an excellent place to capitalise further on our market leading position – through a tried and tested business model and growth strategy.”
The offer is expected to raise gross proceeds of approximately £90m in order to reduce the group’s financial borrowings and provide access to lower cost of financing.
Geoff Cooper has been working with the board of Card Factory since January and will be formally appointed non-executive chairman ahead of the IPO. Octavia Morley and David Stead will be appointed to the board as non-executive directors. Cooper has more than 20 years’ experience of serving on boards of UK public companies, in particular as chief executive of Travis Perkins from 2005 until December 2013, and is currently, inter alia, non-executive chairman of Dunelm Group.
He added: “I was attracted to Card Factory by its compelling business model, clear growth prospects and the strength of its executive management team. In the period I have worked with the group, all these initial impressions have been confirmed. The addition of Octavia Morley and David Stead as non-executive directors will create a highly experienced and well balanced board, capable of leading and supporting the group in the effective execution of its growth strategy.”
