Card Factory is aiming to nearly double its stores count as its owner eyes a potential float, sale or refinancing of the budget greetings card retailer.
Card Factory chief executive Richard Hayes quashed speculation that there was not enough growth left in the retailer to attract interest for a sale or float, outlining plans to expand the business from 650 shops to 1,200 in the long term.
“We believe quite strongly that we can take the business to 1,200 stores,” said Hayes. “We’re fairly confident in achieving those numbers. Management believe there is still significant growth potential in the UK.”
He insisted the retailer is not set on a flotation and is exploring a total of three options for the business after it was reported that Card Factory owners Charterhouse had hired Goldman Sachs to advise on an exit strategy that could include a £700m IPO.
Hayes told Retail week: “The float is just one of three possible options, which include a sale or a refinancing. All three are very real routes and they all have their merits. We’re looking at all three as a company because we’ve performed so well over the last three years.
“And we are forecast to continue with that level of trajectory over the next three years. We’re in a good position,” he said.
Sources told Retail Week that Card Factory has been approached by “a number of well-respected investment banks and venture capitalists who believe Card Factory is an attractive proposition”.
Hayes cautioned however that growth is unlikely to come from overseas, and Europe in particular, because greetings cards are not as popular on the Continent as they are in the UK. “The reality is European culture is not same as the UK,” he said.
He added that the rising cost of stamps was not having an impact on Card Factory’s sales because the retailer makes most of its money through the sale of single units, rather than boxed cards, and that people are more prepared to pay the cost of postage on one card.
“Research shows that if you’re looking at single cards, that market is very robust,” he said. “The core singles market has not been affected by it. And I don’t expect it to be significantly,” he said.
Card Factory’s sales jumped 11% to £254.3m in the year to January 2012, while pre-tax profit edged up to £56.2m from £55.7m.