Interim Results (3123A)

TIDMCC.

RNS Number : 3123A

Clinton Cards PLC

29 March 2012

29 March 2012

CLINTON CARDS PLC

Interim Results for the 26 weeks ended 29 January 2012

Clinton Cards PLC, the UK's largest specialist retailer of cards, today announces its Interim Results for the 26 week period ended 29 January 2012.

Financial Highlights

   --        Like for like sales for the first half were -1.1% (Clintons:-1.0%, Birthdays:-2.0%). 

-- Significantly weaker margins as a result of clearing old stock in the January Sale and an increase in lower margin gift sales throughout the half.

-- First half operating profit before exceptional items of GBP743k (Clintons: GBP3,588k and Birthdays: loss of GBP2,845k).

   --        Basic loss per share of 1.70p (2011: basic earnings per share of 4.08p) 
   --        Cash generated from operations GBP46.9m (2011: GBP34.0m). 

-- Net cash of GBP5.6m (Net debt of GBP34.3m at 31 July 2011 and GBP5.1m at 30 January 2011).

Operational Highlights

Group

-- The strategic review, begun by Darcy Willson-Rymer when he joined as CEO in October 2011, is on track for completion at the end of April and the Company will engage with its stakeholders (including lenders) post-completion. All elements of the business are being reviewed to ensure it is fit for purpose, with a single-minded focus on the customer.

-- Store Support Centre has been restructured, reducing net headcount by 15% and bringing new skills and capabilities into the business.

-- Management team strengthened with appointments of Sarah Morris as Group Trading Director, (previously ran Merchandising for John Lewis) and John Wrighthouse as Group HR Director (previously Group HR Director at the Nationwide Building Society).

Clintons

-- First steps towards the restructuring and strengthening of the store portfolio are underway, bringing total stores to 628. The Group has focused on stores that demonstrate value to the business and closed 17, which were in difficult locations and not meeting business targets. The long-term store portfolio strategy is being determined as part of the strategic review.

-- Continuing to work in partnership with our landlords, moving from quarterly to monthly rents - over 60% of stores now on monthly rents.

Birthdays

   --        Examination of Birthdays within the strategic review. 
   --        Store portfolio restructured to total of 139 from 156, as loss-making stores were exited. 

Borrowing Facilities

-- The Company secured new borrowing facilities in October 2011 for GBP55million, putting Clintons in a position to continue to restructure.

The Board

-- As a result of the amount of change to the Board and Leadership team, Don Lewin, OBE has been invited to continue in his role as Non-Executive Chairman until 31 July 2012, given his detailed knowledge of both the company and the greetings card industry.

-- Hazel Cameron is being appointed as Non-Executive Director, Hazel is a chartered accountant with corporate finance, private equity and non-executive directorship experience including LDC, Cross Atlantic Capital Partners, Bowman Capital and 3i.

-- Dave Hughes is being appointed as Non-Executive Director, Dave brings multichannel and retail knowledge, including experience with Sainsburys, Game and Marks & Spencer.

Darcy Willson-Rymer, Chief Executive Officer of Clinton Cards PLC, said:

"This has been a challenging period in a difficult retail environment, dominated by weak consumer confidence. Margins have also been weaker as a result of the clearance of historic overbuys, obsolete stock and the sale of lower margin gifts.

"Since joining Clintons last year I have embarked on a journey of change, with a single-minded focus on the customer. With the store portfolio undergoing significant restructuring and the management team and the Board strengthened, the business now has the ability to be stronger. However, the legacy of the business cycle means that significant impact will only begin to come through from the end of the second half of the financial year.

"The strategic review - which examines the customer experience, the store portfolio, business efficiency, and the digital offering - is on target for completion at the end of April. This is the main platform for change and I am confident that the conclusions from the review will put the business in the best possible position for a turnaround.

"The outlook for the second half of the current year is below our previous expectations but the changes we are undertaking to the business will deliver significant benefits in future years."

Enquiries:

Clinton Cards

   Darcy Willson-Rymer, Chief Executive Officer                               Tel No: 020 8502 3711 

Speed Communications

Scott McLean Tel No: 020 7842 3260

CLINTON CARDS PLC

("the Company" or "the Group")

Interim Report for the 26 weeks ended 29 January 2012

Clinton Cards PLC, the UK's largest specialist retailer of cards, today announces its Interim Results for the 26 week period ended 29 January 2012.

PERFORMANCE

The last 26 weeks have been challenging given the difficult retail environment which has been dominated by weak consumer confidence. These factors have significantly impacted on Group sales which have declined by 1.1% on a like for like basis. In addition, the clearance of old stock in the January Sale and an increase in the sales of lower margin gifts has resulted in a significant weakening in the margin for the first half.

Total revenue in the period from the Clinton brand was GBP171.7m compared to GBP178.3m from 21 fewer stores than last year. Like for like sales in the 26 weeks ended 29 January 2012 were 1.0% lower but transaction levels remained the same and spend per head decreased by 1.0%

Total revenue for the Birthdays brand in the UK for the 26 weeks ended 29 January 2012 was GBP25.5m compared to GBP28.6m in the corresponding period last year representing a reduction in like for like sales of 2.1%.

At 29 January 2012 Birthdays Retail Limited was trading from 139 stores in the UK compared to 157 at 30 January 2011.

Adjusted operating profit for the 26 weeks was GBP743k (Clintons: GBP3,588k, Birthdays: GBP2,845k loss) compared to an adjusted operating profit of GBP14.4m for the same period last year.

CASH, BORROWINGS AND INTEREST

Average net debt in the 26 weeks to 29 January 2012 was GBP22.1m in comparison to GBP23.6m in the 26 weeks to 30 January 2011, an improvement of GBP1.5m. At the period end net cash, excluding capitalised financing costs, was GBP5.6m (Net debt 2011: GBP5.1m). Cash generated from operating activities was GBP46.9m (2011: GBP34.0m).

Net interest payable in the 26 weeks to 29 January 2012 was GBP2.1m compared to GBP1.6m in the prior period.

CURRENT TRADING

The start of the second half included both the key seasons of Valentine's Day and Mother's Day. Last year, Mother's Day was 2 weeks later and therefore outside the 8 week comparable period. While Group like for like sales are 11.8% up (Clintons: +12.5%, Birthdays +7.3%) for the first 8 weeks of the current year compared to last year, after adjusting for the timing of Mother's Day, the underlying trend is down by 4%.

RESTRUCTURING THE BUSINESS

Since October 2011, we have embarked on a significant journey of change with a single-minded focus on the customer.

Work to restructure the store portfolio has begun with the long-term strategy to be detailed within the strategic review. We are also working in partnership with our landlords, moving from quarterly to monthly rents with over 60% of our stores now on monthly rents.

We have strengthened the team at the Store Support Centre, ensuring the right skills and capabilities are in place to support the business while reducing net headcount by 15%. We have also strengthened the Management team, with appointments of Sarah Morris as Group Trading Director, (previously ran Merchandising for John Lewis) and John Wrighthouse as Group HR Director (previously Group HR Director at the Nationwide Building Society).

The strategic review - examining the customer experience, the store portfolio, business efficiency, and the digital offering - is on target for completion at the end of April and we will engage with stakeholders (including lenders) post-completion. This is the main platform for change and I am confident that the conclusions from the review will put the business in best possible position for a turnaround.

BOARD

As a result of the amount of change to the Board and Leadership team, Don Lewin, OBE has been invited to continue in his role as Non-Executive Chairman until the 31 July 2012, given his detailed knowledge of both the company and the greetings card industry.

Hazel Cameron is being appointed as Non-Executive Director, Hazel is a chartered accountant with corporate finance, private equity and non-executive directorship experience including LDC, Cross Atlantic Capital Partners, Bowman Capital and 3i.

Dave Hughes is being appointed as Non-Executive Director, Dave brings multichannel and retail knowledge, including experience with Sainsburys, Game and Marks & Spencer.

These new appointments replace Robert Gunlack and John Coleman who will be retiring from the Board on the 31 March 2012. In addition, John Robinson will be leaving the Board following his decision to resign from his position as Buying Director and Stuart Houlston will also be stepping down from the Board, but continuing in his role as Group Property Director. I would to take the opportunity to thank Robert Gunlack, John Coleman and John Robinson for their contribution to the business, Stuart for his contribution to the Board and welcome Hazel and Dave to the Board.

OUTLOOK