High street retailer Card Factory has issued a warning it is in danger of breaching its current covenants as lockdowns knock sales.
The business, based in Wakefield, said that it has been significantly impacted by the November and current lockdown, and that it continues to have “constructive discussions” with its banking syndicate.
In a trading update for the 11 months to December 31 2020, the company said sales fell from last year’s full year figure of £424.5m to £281.4m, with gross store sales tumbling 38.1% as a result of mandatory store closures prohibiting openings for 37% of available trading days.
The company, which has more than 1,000 shops across the 海角视频 and Ireland, said: “Whilst our short term cash requirement can be covered within our existing £200m bank facility, we anticipate that current covenants will be breached at the end of January as the significant impact of the November and current national lockdowns are reflected in our trading performance. We continue to have constructive discussions with our banking syndicate.
“Despite initially being given access to Coronavirus Corporate Finance Facility (CCFF), following changes to the scheme rules, we no longer have that opportunity. We are, however, progressing discussions to access supplemental funding options.”
Meanwhile it said its online division continued to perform very strongly, with cardfactory.co.uk achieving a huge 137% like-for-like increase during the period.
Sales to trading partners over the period also grew, by around 63%.
With the current lockdown set to continue to the end of January and beyond, the company said it expects to post a pre-tax loss of around £10m, and until reopening times are clear, it said it cannot provide guidance for FY22.
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Executive chairman Paul Moody said: “In a year, the like of which none of us have ever experienced before, I am hugely proud of the way in which the Card Factory family has risen to the many challenges faced and want to thank every colleague for their huge commitment.
“Throughout 2020 we unwaveringly did all that was necessary to protect our colleagues and customers, making our stores one of the most Covid-secure shopping experiences available. The financial investment has been significant, but critical to enabling us to meet our social responsibility.
“We have successfully pursued key strategic aims, including the acceleration of our digital capability, a streamlined and more effective “newness” range cycle, the implementation of a pricing architecture enabling material retail price progression, auto-replenishment and stock management in store, utilising hand-held technology and bringing ESG to the fore in our decision making.
“I remain convinced that the Card Factory brand, and quality with value proposition, resonates strongly with customers. Despite the obvious uncertainties in the first half of 2021, I am confident that we have the opportunity to return the business to sustainable profitable growth and will do all that is necessary in the near term to ensure that we can maximise that opportunity.”