Card Factory Share Discussion Threads

[mallorca 9] 12/6/2020 18:21

Fair post.

The debt to EBIT though was 2.3 at end Jan.
The Covenants are reviewed monthly - hard to imagine that they're not already pushing up against the 3x max limit.

Probably fair to say that the only thing currently keeping this a float is the Government Furlough scheme.

[lestat102] 12/6/2020 17:06

Mallorca,

You're right debt is too high, but this is largely the result of a highly irresponsible dividend policy. They throw off lots of profit in normal times, more than adequate to service the debt. The big question is whether normal trading will resume and in what time frame.Should it not return massive dilution, at the very least, will be on the cards ( hey, see what I did there..)with possible administration but this will be true for many retailers in the absence of normality. I think that once there are no new covid cases, the publics tolerance for distancing will be low and things will soon be as they were. On the other hand there could be a second spike and its lights out. Next few weeks will be crucial.

[fenners66] 12/6/2020 16:08

Got other things to do
will come back to accounts later

[sbb1x] 12/6/2020 15:47

Your last 4 posts are better!The 12 posts before those 4 were all o dear o dear !

[lastchance23] 12/6/2020 15:44

>>Fenners I appreciate you digging into the accounts, but unless your running the business, you can't 100% validate some of your theories. I suspect the stock inconsistencies may be to do with changes resulting from covid, the second fulfilment centre, and they have Just miss communicated. I am just looking at basic accounts and what we truly know in my decision, but this is not the risk the scare monger are making out.

[mallorca 9] 12/6/2020 15:41

They ARE going bust.

I'm trying to think of anything that could save them - but I'm struggling.

Who would take up placing shares - how much could they raise ?

More likely I think , a sudden suspension in trading !

[fenners66] 12/6/2020 15:11

The CFO's review mentions

"The ratio of other direct expenses to revenue increased slightly by 0.2 ppts - as it had at the half year - largely due to the additional one-off cost of holding increased stock levels"


So at least he knows there were increased stock levels.

Any committed purchases delivered in the last 3 months are likely to be adding to those stocks.

Cost of goods sold last year was £152m
I guess weighted to Xmas
So about what £30m for the last 3 months ?
Some in house so no need to make
but I would guess £5m + added to stock for deliveries in not reqd.

[fenners66] 12/6/2020 15:06

mallorca 9 you have posted this a few times

"The leases cost circa £4m per year"

I have to correct you there.

Looks like lease costs - taken out of property costs - were £43.8m

Which is about £3.65m a month

[fenners66] 12/6/2020 14:56

Just posting quotes from the accounts - for those who have not read them.
IF you think that is scare mongering - then blame the author of the accounts.

and on ...

"The effective sterling-US dollar exchange rate for FY20 was c.$1.35 which is comparable both with FY19 and the anticipated effective P&L rate for FY21; however, the latter remains subject to any significant shift in the value of sterling and the impact of Covid-19 on hedged cash flows."


If I remember correctly I was impressed that they had hedged forward at something like $1.35.

However as introduced above those hedging contracts will have to be rolled over as with near zero sales for 3 months there will be 3 months of non-purchasing and thus the anticipated spend of US $.
Current rates are about $1.26 /£ so that will impact margin


What is going to be the impact re stock write off for sitting idle for 3 months they tout their ability to rapidly change the range as an advantage - is sitting on 3 months or more of stock a disadvantage ?

[rumobejo] 12/6/2020 14:27

surely another monkey didn't read this too from the last results rns

"The business has in place an existing £200m Revolving Credit Facility ("RCF") maturing in October 2023 with our commercial banks, who have remained supportive of the business during this period. Alongside the current bank facilities, the Bank of England have confirmed access to additional funding under the Covid Corporate Financing Facility ("CCFF")."

[lastchance23] 12/6/2020 14:23

Small caps lag big companies, but often have higher volatility, fair value is 70-80p, this is as good as it gets for a bargain with upside. Too much analysis on things like supermarkets, they barely move.

[fenners66] 12/6/2020 14:21

"Delivery of the strategy will require investment in a new ERP system"

Aha ,

Now that can go 2 ways.

Since they are a manufacturing business that likely means some element of bespoke written ERP.
They have 1000 stores so lots of logistics to manage.

If it works , in time it could improve things. In the short term - even with experienced IT partners - it could be a complete disaster.
If it goes pear shaped short term on top of shop closures things could be grim.

[fenners66] 12/6/2020 14:16

I have to wonder what is the profitability of selling cards online ?

After manufacture , order processing shipping and handling what margin is there in a low price card ?

We know that supermarkets have to offer online to retain volume - but they would not want to shift their business online only and the price of the average basket must be many more times that of cards.

[fenners66] 12/6/2020 14:09

"www.gettingpersonal.co.uk business continued to face challenges and whilst it remains a small part of the Group, its financial performance in the year was disappointing with sales decreasing by 9.8% and EBITDA falling to breakeven (FY19: GBP1.2m)"


Sales currently up 27% YTD but will that even get them to a profit ?

[fenners66] 12/6/2020 14:04

"reducing store stock and cash loss and store stock holding. In FY20, we introduced auto-replenishment of Everyday Card in almost all of our stores, and reduced overall stock holding levels. "

Now make your minds up!

I get how less stock could be in stores at the same time as more stock in warehouses where it is useless but saying "reduced overall stock " whilst saying "storage for increased stock levels"


Sorry but that looks like the person who wrote this does not have a clue.

Perhaps they are totally focussed on the stresses in the business today rather than writing a coherent report ?

Perhaps they did not sense check it as they are convinced that shareholders do not read it anyway ?

But these things are supposed to be approved by a team ?

[fenners66] 12/6/2020 13:49

Capex spend on printing and packing and reduced headcount - good.
Attempting to bring more prodn in house - shortening supply chains may be politically good.

But it has to be lower cost - is this all about exchange rates ?
Can higher year on year wages compete with far East production ?
Cost of shipping falling ?

[fenners66] 12/6/2020 13:46

"This year cost pressures continued, with National Living Wage increases, higher card payment fees and storage for increased stock levels."


Increased stock levels ??!!!

But you just said you were making efficiencies from EPOS data ?

That is INCONSISTENT as EPOS data should deliver reduced stock levels !

[fenners66] 12/6/2020 13:38

"We now expect to open seven new stores in 2021, being those which we are already legally committed to and will revise our plans as appropriate. The overall scale of the store roll out programme will be considered as we assess the implications of Covid-19 on store trading. "


Ha ha - I like that bit - touting growing store numbers ... growth
Whilst admitting the only reason they are opening new stores is because they Legally Have To.

6 month review of stores include "downsizing"

I'm sure the next one should.

[trad3m3] 12/6/2020 13:36

Wake up good people!!! Look what is going on around you and the world! We are heading towards massive collapse of all economies, unraveling right in front of your eyes! Invest wisely while you still can!!! I will not make any recommendations instead please use your common sense! Don't get whipped out!

[fenners66] 12/6/2020 13:33

"increasingly aggressive competition. " - cant argue with that.


"In FY20, we continued to make good progress against our established four strategic pillars"

"Card Factory LFL sales were -0.5% (FY19: -0.1%)"

What part of -0.5% vs -0.1% is making good progress ?

Are we back to Comical Ali ?

Why can't they just say it like it is instead of hoping to tell us red is blue ?

[fenners66] 12/6/2020 13:29

"We are utilising EPOS information"

Really ?!

Was this CEO's report written in the 1990's ?
Are we supposed to be impressed ?

"a growing minority of shoppers now buying cards on impulse rather than in planned shopping missions."

They plan to take advantage of that with unplanned cards....... except that with CV no one will want to wait half an hour to buy an unplanned card....

Last year's ideas not this year's.... catch up.

[fenners66] 12/6/2020 13:24

First few para's of Chairman's statement contains lots of buzzwards and little substance.

"Covid-19 global pandemic will only accelerate changes in customer behaviour and present opportunity and challenge in equal measure"

No it will not.
Its a road block - opportunity is for healthcare companies not card retailers.

"currently we do not expect to pay any dividends in relation to FY21." - woken up and need to pay off new debt.
Another Woodford /Invesco high yield nightmare share - look at CLLN and DEBS and IRV all gone.

[fenners66] 12/6/2020 13:16

"Adjusted' APMs have been included to aid comparability"

Because the usual performance measures are an embarrassment and are hardly likely to convince that management deserve a massive bonus ?

Interserve (if memory serves) awarded themselves a massive bonus for putting off insolvency for 6 months..... always with the best interests of shareholders at heart....


"we do not think it is appropriate to provide financial guidance for FY21" - but are looking forward to sharing our "exciting plans for growth "

Put the 2 statements together - we have not got a clue about our finances and I'm sure no shareholder wants to know what our profit and loss / balance sheet might look like - but on the plus side I am so excited......