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Card Factory shares soar as the retailer declares a new refinancing deal

Card Factory shares soar more than 30% as a high street group announces an improved refinancing deal

  • Card Factory was the second highest mover in the FTSE All-Share Index today
  • The company previously agreed a £225m refinancing package in May 2021
  • Sales have recovered significantly since lockdown restrictions were eased

Card Factory shares soared Thursday after the retailer said it had deleveraged and successfully renegotiated better terms with lenders.

Card Factory Stock rose 32.8 percent to 60.1 pence on Thursday, the highest rise in the FTSE All-Share Index, ahead of struggling Anglo-Russian gold miner Petropavlovsk.

Nonetheless, their value remains well below pre-pandemic levels as sales collapsed due to Covid-related restrictions, forcing the group’s stores to temporarily close for the past two years.

Recovery: Since the summer of last year, Card Factory has reignited trading as customers flocked back to their branches following the easing of lockdown rules

This created major financial problems for the Yorkshire-based company, which in January last year warned it could be breaching its banking agreements and struggled to raise emergency financing.

Finally, it agreed to a £225m refinancing package, with a third of the amount comprising a term loan and the remainder a revolving credit facility or CLBILS (Coronavirus Large Business Interruption Loan Scheme) facilities.

Since then, the ticket seller has seen a renewed uptick in trade as customers flocked back to its branches following the easing of lockdown rules, particularly during the critical Christmas trading period.

At the same time, the group’s cash flow has improved and it has used some of the proceeds to reduce its net debt, which stood at £79m at the end of March – excluding lease liabilities.

The company has subsequently managed to arrange a new £150m refinancing deal, which includes a £100m revolving credit facility and £20m of CBILS loans, which are due to be repaid by September next year.

Also included are two term loans totaling £30m, one of which is due to be repaid in the 12 months following January 2023, while the other will be returned in six installments of £1.75m each from April 2024.

Card Factory CEO Darcy Wilson-Rymer called the refinancing agreement “an important milestone” that ensures the company has “the financial footing to take advantage of the opportunities ahead.”

He added: “We are now well positioned to continue our strategic transformation from a managed card retailer to a market-leading omnichannel card and gift retailer. I look forward to updating you on our progress on our full year results next month.’

Card Factory’s announcement today comes less than two weeks before the company is scheduled to report its full year results for the 12 months ended January 2022, where trading is expected to have beaten the board’s guidance.

The company expects revenue of more than £360m, underlying earnings growth of around 50 per cent year-on-year and pre-tax profit of £7m to £10m compared to a loss of £16.4m in the previous ones 12 months.

Looking ahead this year, the company expects sales to continue to grow, although it expects margins to be impacted by higher freight, labor and utility costs, as well as investments in the development of its online platform.

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Card Factory shares soar as the retailer declares a new refinancing deal

Source link Card Factory shares soar as the retailer declares a new refinancing deal

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