Card Factory warns loan terms likely will not be met after pandemic impact
Card Factory has warned it is set to breach its bank covenants by the end of this month after sales were battered by the coronavirus pandemic.
Shares of the card retailer fell after it said it planned to breach the terms of its £ 200million bank loan following the impact of the November and current lockdowns in England.
Card Factory told investors on Thursday that sales fell by around a third, 33.7%, to £ 281.4million in 2020.
He said the crisis was due to the drop in store sales, which fell 38.1% after its stores were forced to close completely for 37% of potential trading days.
Its online channels performed “strongly” over the period, with cardfactory.com recording 137% like-for-like sales growth, while commercial sales increased 63%.
The retailer said it expects to report a pre-tax loss of around £ 10million for the year, up from a profit of over £ 65million the year before.
Rival card seller Paperchase filed a director appointment notice last week after also feeling the impact of the coronavirus restrictions.
Meanwhile, online competitor Moonpig has unveiled plans to float on the London Stock Exchange in a move that is expected to value it at over £ 1 billion after seeing a 135% increase in sales over the past six month leading up to October, as the pandemic attracted more customers online.
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Paul Moody, Executive Chairman, said he was “confident” that Card Factory has the opportunity to return to sustainable growth despite the uncertainty over the first half of 2021.
“In a year like none of us have ever experienced before, I am extremely proud of how the Card Factory family has overcome the many challenges encountered and I want to thank each colleague for their tremendous commitment” , did he declare. .
“Throughout 2020, we have done everything necessary to protect our colleagues and customers, making our stores one of the most secure shopping experiences against Covid.
“The financial investment has been important, but essential to enable us to assume our social responsibility. “
Card Factory shares were down 4.4% to 38.35p in early trading on Thursday.
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