REG - Card Factory PLC - Preliminary Results
Today 07:00
For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20260428:nRSb1132Ca&default-theme=true
RNS Number : 1132C Card Factory PLC 28 April 2026
28 April 2026
Card Factory plc ("cardfactory" or the "Group")
Preliminary results for the year ended 31 January 2026
Continued strategic progress in a challenging consumer environment.
Commitment to return of surplus cash via £15 million share buyback.
cardfactory, the UK's leading specialist retailer of greeting cards, gifts and
celebration essentials, announces its preliminary results for the year ended
31 January 2026 ("FY26").
Financial summary(1)
Financial Metrics FY26 FY25 Change %
Revenue £582.7m £542.5m +7.4%
EBITDA £116.8m £127.5m -8.4%
Profit Before Tax (PBT) £43.9m £64.1m -31.5%
Adjusted PBT £56.0m £66.0m -15.2%
Adjusted Leverage (exc. leases) 1.0x 0.7x +0.3x
Net Debt (exc. leases) £67.9m £58.9m +15.1%
Adjusted Free Cash Flow £40.7m £28.8m +41.2%
Basic EPS 9.0 pence 13.8 pence -35.0%
Adjusted EPS 11.8 pence 14.3 pence -17.3%
Dividend per share 5.0p 4.8p +4.2%
(1) For further information and definitions of Like-for-like (LFL) and other
alternative performance measures see Explanatory Notes (below) "Alternative
Performance Measures ("APMs")".
Darcy Willson-Rymer, Chief Executive Officer, commented:
"Despite a challenging consumer backdrop in FY26, we continued to execute our
strategy to transform cardfactory into a global celebrations group,
underpinned by targeted investment and disciplined cost management. We are
encouraged by the positive contributions of our acquired businesses, with the
acquisition of Funky Pigeon accelerating our digital capabilities and
strengthening our platform for future online growth.
Softer high street footfall in the second half, particularly during our peak
trading period, impacted full-year performance, with Adjusted PBT being
delivered in line with our revised guidance. The Group remains highly cash
generative, and our 'Simplify & Scale' efficiency and productivity
programme will continue to help mitigate inflationary headwinds. We remain
committed to disciplined capital allocation and progressive shareholder
returns, which is reflected in the proposed final dividend and a commitment to
commence a £15 million share buyback programme.
Looking ahead, as widely documented, the external environment remains
uncertain. We have robust plans in place for FY27 to deliver further progress
against our strategic priorities and medium-term ambitions. By remaining
focused on developing our strong value and quality offer, we will continue to
help our customers celebrate life's moments."
Summary:
· UK store estate saw a resilient H1 performance (LFL of +1.3%) with H2
negatively impacted by softer high street footfall (LFL of -1.7%), impacting
full year outturn.
· Strong cash performance with free cash flow of £40.7 million,
representing 98.9% of Adjusted earnings, above our target range.
· Disciplined cost management through the execution of 'Simplify &
Scale' programme.
· Continued progress on evolving the business into a celebration
destination, further expanding and developing range and space as we focus on
meeting customers' celebration needs.
· Became the second largest online UK card and attached gift retailer
following acquisition of Funky Pigeon, creating foundations for future online
growth, underpinned by delivery of £5m synergies from FY28.
· Enhanced capability in Garven to support delivery of North America
card strategy, alongside rollout of international full-service model in
Australia.
Financial highlights:
· Total Group revenue growth of +7.4% to £582.7 million, supported by
positive contributions from acquired businesses.
o Total store sales growth of +1.5%, including +27 net new stores
year-on-year.
o LFL store sales broadly flat at -0.2% with higher average basket values,
driven by targeted pricing actions and ongoing mix shift, offset by fewer
transactions due to low consumer confidence which particularly affected H2
footfall in our peak Christmas trading period.
o Category performance reflected a -0.9% LFL decline in cards, impacting
attached gifting (gifts -1.9% LFL), while celebration essentials grew +1.7%
LFL.
o Revenue from wholesale partnerships of £47.2 million (FY25: £22.2
million) includes annualisation of prior-year acquisitions of Garven and
Garlanna, which have performed in line with the expected acquisition
economics.
o Total digital sales of £20.6 million includes £13.5 million contribution
from Funky Pigeon, YoY revenue decline at cardfactory.co.uk, and closure of
Getting Personal, as we focus on strengthening profitability.
· Adjusted PBT of £56.0 million down -15.2%, reflecting impact of UK
footfall on stores transactions and sales in key trading season; our 'Simplify
& Scale' programme continued to mitigate a significant proportion of cost
inflation.
· Strong cash performance in FY26, free cash flow of £40.7 million,
reflecting improved working capital performance year-on-year and disciplined
capital investment, which offset lower trading income.
· FY26 capex of £19.4m, below target range, reflecting prioritisation
of spend, including significant investment in new store till point of sale
(PoS) system to enhance productivity and future service propositions.
· Net Debt increased £9.0 million to £67.9 million, after acquisition
of Funky Pigeon, dividends and share buyback.
· Continued commitment to shareholder returns with recommended final
dividend of 3.7 pence per share, resulting in total dividend of 5.0 pence per
share for FY26 (FY25: 4.8 pence).
· Commitment to return surplus cash via £15 million share buyback,
which is expected to enhance EPS.
Strategic highlights:
· Stores: Continued expansion of profitable store estate with work to
segment stores completed and rollout underway to build authority in
celebrations.
o +27 net new stores opened in FY26, taking total UK & Republic of
Ireland footprint to 1,117 stores as of 31 January 2026.
o Enhanced data capabilities have enabled the segmentation of the entire
store estate, to further evolve space allocation and strengthen our authority
in celebrations by tailoring ranges and stock to shopper behaviours (e.g.
card-led, party-led, cross-category).
o Initial rollout in stores saw positive LFL sales, particularly in gift and
celebration essentials ranges, versus control group stores.
FY27 priorities:
o New store openings to continue at a similar rate as FY26 in
underpenetrated markets; continue rollout of store segmentation approach.
o Strategic range development with a full party category relaunch in H2 and
updated customer service programme to drive awareness and participation in our
full celebration offer.
· Digital: Capability enhanced through acquisition of Funky Pigeon, on
track to deliver £5m synergies from FY28.
o Acquisition of Funky Pigeon completed in August 2025, strengthening market
position and capability in online card plus attached gifting and
direct-to-recipient market.
o Separation from WH Smith completed with restructured and combined digital
leadership team in place.
o Target operating model established with implementation underway, creating
foundations for future growth through defined proposition for both brands,
underpinned by a single technology platform and optimised fulfilment model to
lower operating costs.
FY27 priorities:
o Complete integration across systems, fulfilment and commercial planning to
establish a scalable and structurally profitable digital business.
o Rollout data capture programme to leverage 24 million store customer base
to drive digital acquisition and engagement, while continuing to evolve online
offer and customer journey.
· Wholesale partnerships: North America strategy development alongside
roll-out of full-service international model.
o Developed strategy for North America card market growth and validated
wholesale model and operational capability to serve US retailers.
o Scoped required product portfolios to support US card market entry, taking
valuable learnings from ongoing partnership with US retailer to inform
development of value and premium ranges alongside future celebration
solutions.
o Successful rollout of full-service model with The Reject Shop in Australia
driving improved performance.
o Completed internal restructure at SA Greetings, strengthening operations
and efficiency through IT and logistics investment.
FY27 priorities:
o Deploy card strategy for North America to support ambition from FY28 of
capturing 1-2% share of addressable market by the end of the decade.
o Develop product portfolio including value and premium card ranges to
support North America growth ambitions and broader wholesale partnership
opportunities.
· 'Simplify & Scale': Continuing to mitigate inflation through
proven efficiency and productivity programme.
o Delivered £21 million of benefits in FY26, including 9% store efficiency
improvement through operational and range optimisation, alongside warehouse
efficiencies and benefits from range and pricing.
o Advanced end-to-end operational improvements, including sourcing, supply
chain and store execution to structurally lower costs from FY27.
FY27 priorities:
o Deliver further opportunities to in-source areas of competitive advantage
and end-to-end operational improvements to offset known inflationary effects
in FY27.
Current trading and outlook
· Total Group sales, excluding the incremental benefit of Funky Pigeon,
through the first three months of the financial year are in line with the same
period in the prior year.
· We are cognisant of the situation in the Middle East and the
potential for impact on direct input costs such as container rates, energy and
fuel surcharges.
· The ongoing geopolitical instability also creates uncertainty in
relation to inflation and consumer sentiment.
· While we remain mindful of this external backdrop, the Board expects
Adjusted PBT in FY27 to be in line with the current market consensus(2),
reflecting:
o Anticipated year-on-year sales growth across all channels including
benefit from the full year contribution of our Funky Pigeon acquisition.
o 'Simplify & Scale' programme benefits to offset usual headwinds
arising from wage growth and general inflation.
o Our assessment of the impact of incremental costs arising from the ongoing
conflict in the Middle East to date.
Our requirements for foreign currency (100%) and energy (80%) being well
hedged for the remainder of FY27.
· As with recent years, we expect the PBT delivery profile to be
weighted to H2.
· The Board remains confident in cardfactory's ability to deliver
mid-to-high single digit percentage Adjusted PBT growth per annum, over the
medium term.
(2) According to company compiled consensus estimates as at 27 April 2026, the
current range of market expectations for FY27 adjusted PBT is £54.8m to
£60.5m, with an average of £58.2m, excluding a statistical outlier
significantly in excess of company guidance.
Preliminary results webcast
There will be a meeting for analysts and investors in central London at 10 am.
In order to register to attend the event in person and receive full attendance
details, please contact cardfactory@teneo.com (mailto:cardfactory@teneo.com)
We will also provide a live video and audio webcast of the presentation,
available by registering via the following link:
https://storm-virtual-uk.zoom.us/webinar/register/WN_eRW_i9q9QmuLurIx9Kxmaw
(https://eu-west-1.protection.sophos.com/?d=sophos.com&u=aHR0cHM6Ly9ldS13ZXN0LTEucHJvdGVjdGlvbi5zb3Bob3MuY29tP2Q9em9vbS51cyZ1PWFIUjBjSE02THk5emRHOXliUzEyYVhKMGRXRnNMWFZyTG5wdmIyMHVkWE12ZDJWaWFXNWhjaTl5WldkcGMzUmxjaTlYVGw5bFVsZGZhVGx4T1ZGdGRVeDFja2w0T1V0NGJXRjMmcD1tJmk9TmpFMFpEQTNNR0V5TURZeU5XSXdaVGRpWW1JeE9ERmomdD1OREJaVGpWcE1FNVRWMVIwZVdsdFNHUnRRelJYTTFkMFQyWlZOMUpJUkZoR1pIRkVTa3RRU0dWV1p6MD0maD04OTM4MGFhN2Q4ZmM0N2JkOGIyYTY4ZGZjZmY0ZjIyMSZzPUFWTlBVRWhVVDBORlRrTlNXVkJVU1Zhc29hbVMxd3pNdnNLRlNqU3JDZElzMjBzcGVLc1Z4b05GZ1F5T3RkMWQzdw==&p=m&i=NjIxNmNhODhmOWIxMzIwZjRlZjRhYTRj&t=TWdtWE9IZWt1VDkwbWJObmFVc0dNdERra256TDhyN1hhOUZySHhOYTNnYz0=&h=f7eeadc025124615be059572cc167883&s=AVNPUEhUT0NFTkNSWVBUSVasoamS1wzMvsKFSjSrCdIs20speKsVxoNFgQyOtd1d3w)
A copy of the webcast and the accompanying presentation will be made available
via the cardfactory investor relations website: www.cardfactoryinvestors.com
(http://www.cardfactoryinvestors.com) .
Enquiries:
Card Factory
plc
via Teneo (below)
Darcy Willson-Rymer, Chief Executive Officer
Matthias Seeger, Chief Financial Officer
Teneo
+44 (0) 207
353 4200
James Macey White / Anthony Di Natale
cardfactory@teneo.com
(mailto:cardfactory@teneo.com)
CHAIR'S STATEMENT
Introduction
FY26 was a year of both encouraging progress and challenge for cardfactory.
While we delivered continued revenue growth and further advanced our strategic
agenda, performance in the second half, in particular, reflected more cautious
consumer behaviour and softer high street footfall, both substantially
influenced we believe, by macroeconomic conditions.
Despite these pressures, the business delivered strong free cash flow of
£40.7 million enabling continued investment in the business. This reflects
the disciplined execution of our strategy whilst maintaining a sharp focus on
operational efficiency and cost management.
We continue to implement our strategy of evolving cardfactory into a broader
celebrations retailer, expanding our offer across occasions and categories,
whilst maintaining our position as the leading card specialist. This is
reflected in the development of our gifts and celebration essentials offer as
we increase our share of the celebration occasions market. Our focus on value
and quality remains central to our customer proposition, ensuring we remain
relevant to all in a more challenging economic environment.
The Board recognises the continued commitment of our colleagues across the
Group. Their contribution, throughout the year, but particularly during peak
trading periods, has been valuable and critical in helping us navigate a more
demanding trading environment, at the same time as progressing our strategy.
Year in review
The year was characterised by a shift in consumer behaviour. Ongoing cost of
living pressures contributed to weaker consumer confidence and, consequently,
more cautious discretionary spending. This was most evident in the second
half, where reduced footfall across all retail formats impacted our UK store
performance. Despite this, in Q4, cardfactory continued to grow share of the
physical UK card market, demonstrating the continued strength and relevance of
our value and quality-led proposition.
We have made good progress against our strategic priorities. Our store estate
expanded during the year, alongside the continued expansion of our celebration
product offer.
The acquisition of Funky Pigeon has significantly strengthened our digital
capability as well as growing our customer reach. Integration plans have been
finalised and our operating model validated, with deployment commencing. We
have a clear pathway to delivering synergies and supporting a more seamless
cross-channel proposition.
Our wholesale partnerships business also performed well, with encouraging
progress across acquired businesses and continued rollout of our international
model.
Outlook and macro environment
Total Group sales for the first three months of FY27, excluding the
incremental benefit of Funky Pigeon, are in line with the same period in the
prior year. For the full financial year we anticipate total sales across all
channels to grow year-on-year, including the benefit from the full year impact
of the Funky Pigeon acquisition.
We are cognisant of the situation in the Middle East and the potential for
impact on direct input costs such as container rates, energy and fuel
surcharges. However, we expect the rigorous delivery of our 'Simplify &
Scale' programme to substantially offset inflationary pressures, including
incremental cost impacts that are currently quantifiable as a result of the
Middle East conflict. This programme, together with our hedged foreign
exchange and energy positions, provides a reasonable level of cost visibility
for the remainder of the year.
Profit margins across the business are expected to remain broadly consistent
with FY26, with profit delivery weighted towards the second half, in line with
prior years.
Taking these factors together, the Board expects growth in Adjusted PBT for
FY27 to be in line with the current market consensus(2). We however remain
mindful of the potential implications of geopolitical developments on consumer
sentiment and input costs.
Over the medium term, the Board remains confident in cardfactory's ability
to deliver mid-to-high single digit percentage Adjusted PBT growth.
In line with our capital allocation policy, the Board has recommended a final
dividend of 3.7p per share, resulting in a total dividend of 5.0 pence per
share for FY26 (FY25: 4.8 pence).
In addition, the Board has concluded that the Group has surplus cash at the
end of FY26, supported by the strong free cash generation in the period. As a
result, we intend to shortly commence a share buyback programme to repurchase
up to £15 million of shares during FY27.
ESG strategy
The Board continues to oversee implementation of our 'Delivering a Sustainable
Future' plan, ensuring that sustainability remains embedded within our
strategy and operations. Progress has been made across all pillars, including
climate, waste and circularity, protecting nature, people and equity, and
governance.
Summary
While FY26 presented challenges, particularly in the second half, the Board
remains confident in the long-term growth potential for cardfactory. We have
continued to strengthen our strategic foundations and see significant
opportunity to increase our share of spend within the celebrations market,
meaning we are well positioned to deliver sustainable profitable growth over
the medium term.
Paul Moody
Chair
28 April 2026
CHIEF EXECUTIVE OFFICER'S REVIEW
Introduction
FY26 reinforced that celebrations remain an essential part of everyday life,
with customers continuing to prioritise key moments. This was despite a shift
in consumer behaviour as we approached the key Christmas trading season, with
customers shopping less frequently and with greater intent, resulting in more
challenging trading conditions as confidence weakened and footfall declined.
As a result, while participation in celebration occasions remains high, the
second half of FY26 saw customers consolidate purchases into fewer trips and
plan more carefully around specific occasions, with greater emphasis on value.
For cardfactory, that resulted in lower transaction volumes which was broadly
offset by higher average basket values.
However, the celebration occasions market remains resilient, with UK customer
participation consistent at over 99%. Moreover, our addressable market within
gifts and celebration essentials continues the growth seen since our capital
markets strategy update in May 2023.
This underpins the opportunity we see to increase our share of customers'
annual celebration spend across cards, gifts and celebration essentials. We
are well positioned to deliver on this, serving over 24 million unique
customers in our stores every year and building on our UK market leadership in
cards and key celebration categories. Our strategy is focused on increasing
participation across more occasions and categories across our channels and
markets.
Through the year we delivered revenue growth and strong cash performance,
while continuing to invest in the business and strengthen the foundations for
growth in celebrations.
FY26 performance
FY26 was a year of continued strategic execution against a more challenging
consumer backdrop. Softer high street footfall and reduced transaction
volumes, particularly in the second half, impacted UK store performance, with
Like-for-like sales broadly flat at -0.2% and LFL transactions down 3.7%. This
was largely offset by an increase in average basket value of 3.5%, reflecting
more considered purchasing behaviour and continued engagement across a broader
range of celebration occasions.
Group revenue increased by 7.4% to £582.7 million, supported by new store
openings and the annualisation of prior-year acquisitions. Adjusted PBT of
£56.0 million reflects the impact of weaker H2 trading across UK stores
alongside ongoing cost inflation, although disciplined execution of our
'Simplify & Scale' programme helped mitigate a significant proportion of
these pressures and supported strong free cash flow generation of £40.7
million.
Through FY26, we have continued to make clear progress against our 'Opening
Our New Future' strategy, strengthening our position as a celebration
destination. Since FY23, we have added £119 million of revenue and grown
Adjusted PBT by 14.5%, demonstrating both the resilience of our model and the
scale of the opportunity ahead.
Investment in our store estate saw the opening of 27 net new stores during the
year as we expanded into underpenetrated locations while also making further
progress within our space optimisation programme. This builds on the progress
we have made since FY23 in expanding our gifts and celebration essentials
offer, which has driven sustained growth in non-card categories and enabled us
to participate in a greater share of customer spend.
At the same time, we have strengthened our multi-channel capability through
the acquisition of Funky Pigeon which has expanded our digital customer base
and contributed £13.5 million of revenue in the year. Looking ahead, this
will enhance our ability to serve customers across channels. Although
performance at cardfactory.co.uk declined as we reset our proposition and
marketing approach, these actions are focused on driving more sustainable and
profitable growth over the medium term.
Our wholesale partnerships business has continued to scale rapidly, with
revenue more than doubling to £47.2 million which includes positive financial
contribution from our acquired businesses and annualisation of Garven and
Garlanna.
Strategy delivery
Through the year we have continued to deliver on our 'Opening Our New Future'
strategy across the business, with a focus on strengthening our customer
proposition, developing capability across our channels and continuing to
leverage the benefits of our vertically integrated model.
Within our core retail business, we have progressed the evolution of our store
proposition with ongoing changes to space allocation, merchandising and range
presentation which are designed to better reflect how customers shop across
different occasions. By using our enhanced data capability, we have segmented
our entire store estate to further evolve space to build authority in
celebrations. This will see us tailor ranges and allocations based on shopper
behaviours, such as when a mission is card-led, party-led or cross-category.
A key focus for FY26 was strengthening our digital capability, with a clearer
articulation of the role that online plays within the Group. While cardfactory
is the UK's leading specialist card retailer, we see clear headroom to grow
our online market share, particularly through a compelling card and gift
attached offer that leverages our existing market strength. By acquiring Funky
Pigeon, we are able to expand our presence in online and personalised cards.
At the same time, integration activity is focused on aligning systems,
fulfilment and customer propositions across both Funky Pigeon and
cardfactory.co.uk which will deliver integration synergies of £5m and
accelerate the omnichannel proposition from FY28.
Funky Pigeon also complements our nationwide store estate. As we broaden our
celebrations offer, from FY28 this will create the opportunity to extend our
store-based party and celebration offer, enabling both in-store and online
customers to seamlessly access a wider range through our omnichannel services.
Across wholesale partnerships and international, we have continued to develop
a capital-light route to market. This includes further rollout of our
full-service model with The Reject Shop in Australia, as well as expansion
into the New Zealand market. We have also further developed our Aldi
partnership, with additional seasonal and Christmas ranges delivering strong
performance in FY26.
Alongside this, we have embedded and strengthened our international
operations. This includes realisation of synergies and additional sales
opportunities with Garven and Garlanna, the completion of an internal
restructuring at SA Greetings to improve operational efficiency through
upgraded IT and logistics investment, and the development of capability within
Garven to support our North America card strategy.
These initiatives have been supported by continued delivery of efficiencies
across the business through our 'Simplify & Scale' programme, with a focus
on improving productivity, simplifying processes and strengthening operational
execution. Our unique, vertically integrated model remains central to this
approach. By combining in-house design, sourcing and supply chain capability
with a scaled retail and digital footprint, we are able to manage costs more
effectively, respond with greater agility to changes in input costs and
customer demand, and maintain a strong value proposition across our card, gift
and celebration essentials ranges.
Looking ahead, our priorities are focused on strengthening brand authority in
gifts and celebration essentials, targeting Like-for-like growth of around
2-3% from FY28 by helping customers fulfil celebrations shopping missions,
engaging our 24 million customers more effectively, and delivering a seamless
cross-channel experience.
People & Culture
Our colleagues and culture remain central to delivering our strategy and
supporting our ambition to become a leading celebrations group. We view our
culture as a key enabler of growth, with a clear focus on customer, community
and purpose, ensuring customers remain at the heart of decision-making across
the business.
During the year, we have continued to strengthen capability and leadership
across the organisation, investing in colleague development, talent
acquisition and the overall colleague experience. This focus supports an
engaged and inclusive workforce, enabling us to deliver for our customers and
progress our strategic priorities.
ESG progress
As we continue to integrate sustainability into decision-making across the
business, our focus remains on the areas where we can have the greatest
impact, including reducing our environmental footprint, sourcing responsibly
and supporting the communities we serve.
During the year, we have advanced our initiatives across these areas,
supported by improved governance and clearer accountability. This includes
ongoing work to reduce emissions across our operations and supply chain,
strengthen responsible sourcing practices and enhance our engagement with
colleagues and communities. As we scale the business, we remain committed to
embedding ESG considerations into our strategy and operations to support
long-term, sustainable growth.
Summary
Through FY26 we have expanded our role in the celebrations market and continue
to see opportunities to increase our share of customers' annual celebration
spend. While near-term conditions remain uncertain, our focus on disciplined
execution, combined with the resilience of the celebration occasions market,
provides a clear basis for sustainable growth over the medium term.
Darcy Willson-Rymer
Chief Executive Officer
28 April 2026
CHIEF FINANCIAL OFFICER'S REVIEW
Financial highlights
The Group delivered sales growth of 7.4% in FY26, which reflects contributions
from acquired businesses and the benefit of new stores.
Profitability was impacted by consumer confidence in the UK, which led to
lower footfall and transactions in our UK stores through the important
Christmas season. Cash performance significantly improved year-on-year and we
maintain our progressive regular dividend.
● Total group revenue of £582.7 million increased by +£40.2
million (+7.4%) year-on-year.
● Completed the acquisition of Funky Pigeon for total cash
consideration of £25.7 million (plus transaction costs) in August 2025,
accelerating delivery of our digital strategy.
● Previous acquisitions of Garven in the US and Garlanna in
Republic of Ireland performed well, contributing to £25.0 million growth in
sales from wholesale partnerships.
● Adjusted PBT of £56.0 million declined year-on-year due to impact
of low consumer confidence and high street footfall in the UK on our UK
stores. Our store estate remains highly profitable and cash generative with
low levels of loss-making stores.
● Free cash generation of £40.7 million, representing 98.9% of
Adjusted earnings.
● Strong balance sheet, with net debt of £67.9 million and adjusted
leverage of 1.0x.
● Store portfolio in UK & Republic of Ireland stands at 1,117
stores at 31 January 2026, up by +27 from 1,090 stores on 31 January 2025.
● Final dividend of 3.7 pence, bringing progressive total dividend
to 5.0 pence per share (approximately £17.5 million), 4.2% increase compared
to FY25.
● Surplus cash to be returned to shareholders via £15 million
share buyback.
Financial performance
FY26 FY25
Revenue £582.7m £542.5m
EBITDA £116.8m £127.5m
Adjusted Profit Before Tax £56.0m £66.0m
Profit Before Tax £43.9m £64.1m
Adjusted earnings per share 11.8 pence 14.3 pence
Basic earnings per share 9.0 pence 13.8 pence
Dividend per share 5.0 pence 4.8 pence
Net Debt (exc leases) £67.9m £58.9m
Adjusted free cash flow £40.7m £28.9m
Cash from operations £122.3m £105.6m
Free cash conversion 98.9% 58.2%
Adjusted Leverage (exc. leases) 1.0x 0.7x
Adjusted PBT excludes transactions that are either one-off in nature or
otherwise not part of the Group's underlying trading performance. In FY26 this
includes one-off restructuring/transformation costs (£0.4 million),
acquisition-related costs (£3.8 million), Intangible asset write-off (£3.2
million) and unrealised losses on derivative contracts (£4.7 million).
Alternative performance measures are defined, calculated and reconciled to
relevant IFRS measures in the explanatory notes at the end of this document.
Introduction
FY26 was a year of further strategic progress. We continued to expand our
store estate, celebration and party products continued to grow as a proportion
of our overall sales, our recent international wholesale acquisitions
performed in line with our expectations and contributed positively to the
bottom line, and we acquired Funky Pigeon, a key step in accelerating our
digital strategy.
However, financial performance in our UK stores was impacted by a challenging
consumer environment, particularly in the important final quarter, which
impacted our overall profitability due to lower footfall and consequently
fewer transactions. This meant we were unable to leverage the benefit of
operational gearing over Christmas to offset inflationary impacts to the
extent previously expected, and profitability was further impacted by
associated inventory provisions and impairment charges related to stores.
cardfactory remains a highly profitable, cash-generative business and we
remain committed to our policy to deliver a sustainable and progressive
dividend to shareholders. Since reinstating dividends in FY24, we have
returned 73% of the free cash we have generated, to shareholders, whilst
making strategic acquisitions and maintaining a strong balance sheet. All
this, despite absorbing an estimated £60m+ of inflation headwinds over the
same three year period.
The environment in which we operate, like many businesses, remains uncertain
driven by external factors and we are not immune to the broader effects of the
current conflict in the Middle East. However, the steps we have taken over the
last three years to make our business more efficient and more resilient put us
in a better position to navigate the current period of macroeconomic and
geopolitical instability.
In this context, our value credentials across cards, gifts and celebration
essentials have never been more important and we remain focused on helping our
customers celebrate all of life's moments.
We remain confident in our strategy to reach more customers in more locations
across all of our channels and growing our share of their overall celebration
spend as we continue to target mid-to-high single-digit percentage Adjusted
PBT growth per annum across the medium term.
Sales
Total Sales
FY26 FY25 Change
£m £m %
Stores 514.6 506.8 +1.5%
Digital 20.6 13.2 +56.8%
Wholesale partnerships 47.2 22.2 +113.4%
Other 0.3 0.3 -15.5%
Group 582.7 542.5 +7.4%
LFL Sales
FY26 FY25
cardfactory stores -0.2% +3.4%
cardfactory online -19.9 +0.1%
cardfactory LFL -0.5% +3.3%
Total Group revenue for FY26 was £582.7 million, an increase of £40.2
million or +7.4% compared to FY25.
Despite the impact of lower footfall and fewer transactions in UK stores,
Group revenue growth remained in line with our medium-term guidance for
mid-to-high single-digit percentage sales growth each year, with sales growth
delivered across all channels.
Growth was underpinned by our recent acquisitions, including the contribution
of Funky Pigeon since acquisition in August 2025, plus annualisation of Garven
and Garlanna acquired during the second half of the previous financial year.
Our UK & Republic of Ireland store estate remains the core of our
business, and we continue to grow our store footprint. We opened +27 net new
stores in FY26, bringing the total store portfolio to 1,117 stores (1,069 in
the UK and 48 in the Republic of Ireland). We continue to see opportunities to
grow the estate and expect to deliver net new stores at a similar rate for the
foreseeable future.
This expansion underpinned total revenue growth in stores of +1.5%, although
Like-for-like store sales declined slightly (-0.2%) as we saw low footfall
and, as a result, fewer transactions in the final quarter of the year due to
low consumer confidence in the UK as a result of challenging macro conditions
for consumers and a perceived decline in disposable incomes, particularly
among lower-income demographics.
In this context, we continued to perform broadly in line with the wider
non-food market and increased our share of physical UK card market sales in
Q4. However, the lower-than-expected sales has a disproportionate impact on
our profitability, limiting our ability to leverage operational gearing to
offset cost base inflation in the final quarter of the year, resulting in a
net impact of approximately £4 million on our PBT performance in the period.
Total digital sales increased by +56.8% to £20.6 million. This reflects the
closure of Getting Personal from 31 January 2025 and the acquisition of Funky
Pigeon from August 2025. LFL sales from the cardfactory.co.uk platform
declined year-on-year as we continued to focus on developing a more profitable
range and offer.
Our priority for digital now lies in integrating Funky Pigeon and moving both
brands on to one technology platform which supports a lower cost to operate
and delivery of synergies from the acquisition.
We expect sales from digital to grow in FY27 due to the annualisation of the
Funky Pigeon acquisition and are focused on delivering growth in our share of
online card plus attached gift sales from FY28 when we are scheduled to
accelerate the omnichannel proposition.
Sales from our wholesale partnerships business increased significantly
(+113.4%) compared to FY25, largely due to annualisation of the Garven and
Garlanna acquisitions. Both businesses performed well in FY26, in line with
the anticipated acquisition economics, adding top-line sales with PBT margins
favourable to the wider Group.
Gross profit
FY26 FY26 FY25 FY25
£m % Sales £m % Sales
Group sales 582.7 542.5
COGs (189.0) (32.4%) (164.4) (30.3%)
Product margin - constant currency 393.7 67.6% 378.1 69.7%
FX (losses)/gains (5.5) (0.9%) (0.8) (0.1%)
Product margin 388.2 66.6% 377.3 69.5%
Store & warehouse wages (143.3) (24.6%) (134.4) (24.8%)
Property costs (27.4) (4.7%) (25.0) (4.6%)
Other direct costs (28.8) (4.9%) (24.1) (4.4%)
Gross profit 188.7 32.4% 193.8 35.7%
Adjusted Gross profit 193.2 33.1% 192.9 35.6%
Product margin calculated on a constant currency basis using a consistent
GBPUSD exchange rate across both periods. FX gains and losses reflect
conversion from the constant rate to prevailing market rates.
Product margin, which includes the purchase price of goods along with inbound
freight, carriage and packing, increased, when calculated using a constant
rate of currency exchange, by £15.6 million to £393.7 million. However,
product margin rate on a constant currency basis fell by 2.1 percentage points
to 67.6%. As we execute our strategy, we expect product margin rates to
gradually reduce. This reflects our objective to grow our share of the
celebrations market in which we operate, with non-card products attracting a
lower rate, but higher absolute value of product margin, than cards. In
addition, the growth of our wholesale business has a similar impact with lower
product margins but, on average, higher PBT margins than other channels.
In FY26, we also saw some one-time impact from range-change and promotional
activity in the first half of the year as we positioned ourselves for the key
Christmas season. For the full year, COGs includes a charge of £2.1 million
related to inventory provisions, due to slower than expected sell-through
rates linked to the impact of fewer transactions on UK stores sales in the
year.
The Group purchases approximately half of its goods for resale in US Dollars
(USD) from suppliers in the Far East. Our well-established currency hedging
policy continues to protect us from short-term volatility in currency rates.
Foreign exchange (FX) losses includes two components, the underlying exchange
differences to convert purchases in the year from the constant currency rate
to the actual exchange rate achieved in the period, plus the non-underlying
valuation movements that relate to the components of our FX hedging portfolio
that do not qualify for hedge accounting under the applicable accounting
standards.
Underlying FX losses reduced year-on-year, from £2.3 million in FY25 to £0.8
million in FY26, principally reflecting an improved effective rate on USD
deliveries in the year. Our average USD delivered rate in FY26 was 1.2842,
compared to 1.2589 in FY25.
Non-underlying FX losses increased significantly, reflecting volatility in
market FX rates between 31 January 2025 and 31 January 2026, and the resulting
impact on the balance sheet valuation of our portfolio of FX derivatives for
delivery in future periods. These non-cash, non-trading losses amounted to
£4.7 million in FY26.
Looking forward, if current market GBPUSD rates are maintained, we would
expect delivered rates to trend gradually higher over the next two to three
years.
Store and warehouse wages increased by £8.9 million, or approximately 6.6%.
The impact of living wage and national insurance changes from April 2025 was
estimated to be £15 million, with a further increase in the size of the store
estate of approximately 2.7%. These inflationary impacts were offset by a
continued focus on store productivity, which resulted in an 9% reduction in
store hours and lower levels of temporary and seasonal staff recruitment.
Property costs include business rates, service charges and insurance, and have
increased year-on-year due to the increase in size of the store estate and
business rates increases from April 2025. Other direct costs include direct
insurance premiums, utilities, maintenance and marketing costs. The increase
from FY25 is predominantly due to the Funky Pigeon acquisition and associated
direct marketing costs, which are highest in the period immediately prior to
the Christmas season.
As a result, total gross profit for the Group was £188.7 million, a
year-on-year reduction of £5.1 million. However, when non-underlying FX and
other transactions are excluded, adjusted gross profit increased slightly to
£193.2 million as calculated in the glossary below.
EBITDA & operating profit
FY26 FY26 FY25 FY25
£m % Sales £m % Sales
Group sales 582.7 542.5
Gross profit 188.7 32.4% 193.8 35.7%
Operating expenses (71.9) (12.3%) (66.3) (12.3%)
EBITDA 116.8 20.0% 127.5 23.4%
Adjusted EBITDA 123.6 21.2% 128.6 23.7%
Depreciation & amortisation (16.2) (2.8%) (12.2) (2.2%)
Right-of-use asset depreciation (36.6) (6.3%) (36.4) (6.7%)
Impairment reversals/(charges) (4.6) (0.8%) 0.4 0.1%
Operating profit 59.4 10.2% 79.3 14.6%
Adjusted operating profit 71.5 12.3% 80.7 14.9%
Operating expenses (excluding depreciation and amortisation) include
remuneration for central and regional management, business support functions,
design studio costs and business insurance, together with central overheads
and administration costs.
Total operating expenses have increased £5.6 million compared to the prior
year, to £71.9 million, £7.1 million of which is attributable to new and
annualized acquisitions. On an organic basis, operating costs have reduced
year-on-year due to savings as a result of restructuring activities activated
at the end of FY25 and reductions in indirect marketing expenditure.
In addition, we incurred £1.7 million of one-off transaction costs associated
with the Funky Pigeon acquisition, which have been excluded from Adjusted
results as a non-underlying item.
EBITDA was therefore £116.8 million in FY26, compared to £127.5 million for
the prior year.
Right of use asset depreciation has increased modestly in FY26, as increases
resulting from new stores were offset by savings on renewals, including
reallocation of renewal costs between depreciation and interest charges as a
result of changes in the underlying interest rate implicit in the lease. We
maintain an average lease term at inception across the portfolio of five
years, with a break clause typically at three years, meaning in many cases the
time to the next lease event is less than 2.5 years. On average 20% of the
lease portfolio renews each year, enabling us to negotiate reductions in
market rents where available.
EBITDA after deducting depreciation and interest charges relating to store
leases was £70.4 million (a margin of 12.1%) in FY26 compared to £83.5
million in FY25 (a margin of 15.4%).
Depreciation and amortisation increased £3.9 million to £16.1 million in
FY26. Of the increase, £1.3 million relates to acquisitions and a further
£1.8 million comes from amortisation of acquired intangibles. There was a
small increase as a result of continued capital investment, with total capital
expenditure of £19.4 million in FY26.
Impairment charges include a net charge of £1.5 million associated with store
lease assets, reflecting the deterioration in performance of certain stores
year-on-year and anticipated impact on earnings over the remaining lease term.
Less than 2% of the total store estate makes a negative contribution, despite
the reduction in footfall and transactions in the year.
Following the acquisition of Funky Pigeon, we have worked to integrate a
number of core business systems quickly, which was successfully concluded
around the end of the financial year. Simultaneously, we have validated the
plan to integrate and combine Funky Pigeon with our existing digital business,
which will drive future revenue and annualised cost synergies of at least £5
million per annum from FY28.
As a result of this work, assets associated with the existing cardfactory
digital platform and technology stack will become obsolete in the next 12
months and, accordingly, these assets have been fully written down in FY26 as
a one-off, non-cash, non-underlying item. Total digital impairment charges in
the period were £3.2 million.
Profit Before Tax
FY26 FY26 FY25 FY25
£m % Sales £m % Sales
Group sales 582.7 542.5
Operating profit 59.4 10.2% 79.3 14.6%
Net finance costs (15.5) (2.7%) (15.2) (2.8%)
Profit Before Tax 43.9 7.5% 64.1 11.8%
Non-underlying transactions 12.1 2.1% 1.9 0.4%
Adjusted Profit Before Tax 56.0 9.6% 66.0 12.2%
The composition of net finance costs is set out in the table below.
FY26 FY25
£m £m
Interest on bank loans and overdrafts 6.5 6.4
Interest received on deposits (0.3) (0.2)
Other finance costs(1) 0.6 1.0
IFRS 16 leases interest 8.7 8.0
Total finance expenses 15.5 15.2
(1) Other finance costs includes loan issue cost amortisation and other
financing costs
Net finance costs increased by £0.3 million to £15.5 million, which includes
interest paid on bank debt, amortisation of refinancing costs and lease
interest, offset by interest income earned on cash investments.
The average cost of our senior group facilities in FY26, taking into account
margin, indexation and the impact of hedging activity, was 6.5% (FY25: 7.1%).
The decrease principally reflects the gradual reduction in market rates of
interest during the year.
Other finance costs in FY25 included a £0.5 million one-off charge as a
result of the April 2024 refinancing.
FY26 FY25
£m £m
IFRS 16 depreciation 37.7 36.0
IFRS 16 leases interest 8.7 8.0
Total IFRS 16 46.4 44.0
IFRS 16 depreciation includes impairment and gains/losses on disposal. Total
costs in this table reflect lease costs not included in the calculation of
EBITDA, above.
IFRS 16 leases interest has increased, reflecting both the increase in size of
the store portfolio and changes in market interest rates reflected in
renewals. Our average lease term is five years, with higher rates of interest
applicable on new and renewed leases compared to those entered into five years
ago.
Adjusted Profit Before Tax (PBT), which excludes the impact of one-off
transactions in the period that are not reflective of the Group's underlying
trading performance, was £56.0 million compared to £66.0 million in FY25, a
reduction of 15.2%, which principally reflects the challenging trading
conditions for UK stores in the final quarter of the year.
Adjusted PBT margin has reduced as a result to 9.6%.
Reported Profit Before Tax for the year was £43.9 million, down from £64.1
million for the previous year.
The total reported Profit Before Tax for the year includes non-cash unrealised
losses on derivative contracts of £4.7 million, impairment charges in
relation to digital assets of £3.2 million, plus amortisation of acquired
intangible assets of £2.1 million in addition to cash charges relating to
transaction and integration costs of £2.1 million. These items are not
reflective of the underlying trading performance of the Group and/or are
one-off in nature and as such have been excluded from Adjusted PBT.
Taxation
The majority of the Group's profits are made, and therefore subject to
taxation, in the UK. The tax charge for FY26 of £12.7 million (FY25: £16.7
million) reflects an effective tax rate of 28.9% (FY25: 25.4%).
The reduction in the tax charge in part reflects lower profitability, with the
higher effective rate principally due to the impact of adjustments related to
the effect of expenses not deductible for tax purposes which increased in FY26
due to the one-time effect of transaction costs related to the Funky Pigeon
acquisition. On an Adjusted basis, excluding the tax impact on non-underlying
transactions, the effective tax rate was 26%.
Going forward, we expect the effective tax rate to continue to be similar to
the headline rate of corporate tax in the UK (currently 25%) in future
periods.
The Group makes UK corporate tax payments under the 'Very Large Companies'
regime and thus pays its expected UK tax bill for the financial year in
quarterly instalments in advance. Total net corporation tax payments for the
Group in FY26 totalled £12.0 million (FY25: £16.7 million), the reduction
reflecting the reduction in expected taxable profits, which was known before
the final UK instalment became payable in January 2026.
Earnings per share
The net result for the year was a profit after tax of £31.2 million (FY25:
£47.8 million). As a result, basic earnings per share (EPS) for the year was
9.0 pence, with diluted EPS of 8.9 pence.
FY26 FY25
Profit after tax (£m) 31.2 47.8
Adjusted EPS (pence) 11.8 pence 14.3 pence
Basic EPS (pence) 9.0 pence 13.8 pence
Diluted EPS (pence) 8.9 pence 13.7 pence
Adjusted EPS, which excludes the post-tax effect of one-off transactions in
the period, was 11.8 pence compared to 14.3 pence in FY25. A reconciliation of
all Alternative Performance Measures is set out in the explanatory notes at
the end of this document.
Cash flows
FY26 FY25
£m £m
Cash from Operating Activities (after tax) 110.3 88.9
Cash used in Investing Activities (44.8) (40.5)
Cash used in Financing Activities (64.2) (42.9)
Impact of foreign currency exchange rates (0.4) (0.1)
Net Cash Flow for Year 0.9 5.4
Operating cash flows less lease repayments 64.6 43.3
Free Cash Flow 40.7 17.2
Adjusted Free Cash Flow 40.7 28.8
Free cash conversion (%) 98.9% 58.2%
Cash performance in FY26 was strong, underpinned by disciplined investment in
working capital, particularly through careful inventory management as stores
sales didn't meet our expectations towards the end of the year. This enabled
us to maintain a broadly flat working capital position, compared to a £22.1
million outflow in FY25, supporting an increase in operating cash flows.
Going forward, we expect working capital cash flows to be broadly matched to
revenue growth, with a small level of investment as our business grows.
Capital expenditure was £19.4 million, compared to £18.4 million in FY25 as
we continue to invest in new stores and infrastructure and growth projects to
support our strategy.
Free Cash Flow in FY26 was £40.7 million, reflecting a conversion rate
compared to adjusted earnings of 98.9%, above our target range of 70-80%. We
define free cash as cash flow before M&A activity, distributions and
changes in debt drawn.
This level of free cash generation enables us to maintain a progressive
regular dividend despite the reduction in earnings year on year.
We invested £27.4 million (inclusive of transaction costs) in the acquisition
of Funky Pigeon and made distributions totalling £22.2 million.
The Funky Pigeon acquisition was funded by an incremental drawdown on our
group RCF facility.
Balance sheet
Acquisition of Funky Pigeon
On 14 August 2025, the Group completed the acquisition of 100% of the issued
share capital of funkypigeon.com Limited ('Funky Pigeon') from WH Smith Group
for total cash consideration of £25.7 million (after customary completion
adjustments for cash, debt and working capital). The acquired business
operates funkypigeon.com, an established online personalised card and attached
gifting business, which is supported by its standalone teams in Bristol and
Guernsey.
The acquisition strengthens the Group's position within the online card and
attached gifting market in the UK and accelerates cardfactory's digital
strategy, providing a platform for online growth, particularly in the
direct-to-recipient card and attached-gifting market. Further operational
synergies will be unlocked by utilising both Funky Pigeon's existing order
fulfilment capability in Guernsey for personalised cards and cardfactory's
in-house manufacturing and fulfilment facility in Baildon, West Yorkshire for
card and attached-gifting orders.
The acquisition was funded by the Group's existing debt facilities, as we
extended the facility size by £35 million (to £160 million total) using the
accordion option in the facility agreement. A further £40 million of
accordion remains available to the Group in future if required. The additional
facility draw over and above the initial acquisition cost provides the Group
with flexibility to provide targeted investment into the acquired business as
we aim to grow our overall online presence and manage short-term working
capital flows.
The accounting for the acquisition has been completed and has resulted in the
recognition of intangible assets of £19.7 million and £7.4 million of
goodwill. See note 25 in the condensed consolidated financial statements for
more information. We expect to exclude the amortisation of acquired
intangibles from our adjusted PBT going forward.
Capital expenditure
Total capital expenditure in FY26 was £19.4 million, increased from £18.4
million in FY25.
Our investment programme continues to include the rollout of new stores and
refresh and renewal of the store estate, as well as targeted investments in
infrastructure and growth projects to deliver our strategy.
Key investments in FY26 included a system upgrade to our store till systems
(PoS), further enhancements of our SAP-based ERP system and store fit outs for
new stores opened in FY26.
We continue to expect that capital expenditure will be in the range of £20-25
million per annum going forward. In FY27, we anticipate capital expenditure
will be at the upper end of this range reflecting the investment needed to
deliver the target operating model for digital and development of our
manufacturing capabilities. Consequently, free cash and cash conversion are
likely to be towards the lower end of our target range in FY27.
Net Debt
FY26 FY26 FY25 FY25
£m Leverage £m Leverage
Current borrowings 1.5 -
Non-current borrowings 83.8 74.0
Total borrowings 85.3 74.0
Add back capitalised debt costs 1.4 1.4
Gross bank debt 86.7 75.4
Less cash (18.8) (16.5)
Net Debt (exc. leases) 67.9 58.9
Leverage (exc. leases) 0.6x 0.5x
Adjusted Leverage (exc. leases) 1.0x 0.7x
Lease liabilities 123.2 110.4
Net Debt (inc. leases) 191.1 169.3
Leverage (inc. leases) 1.6x 1.3x
Our balance sheet remains strong. The Group's cash generative profile enables
us to maintain low levels of Net Debt and leverage whilst continuing to make
disciplined investments to grow the business and accelerate delivery of our
strategy.
Net Debt increased by £9.0 million in FY26, closing the year at £67.9
million, resulting in an adjusted Leverage ratio just below 1.0x, comfortably
within our longer-term target to keep this measure below 1.5x.
This represents a strong cash generation performance, described above, whilst
investing in the acquisition of Funky Pigeon and making cash returns to
shareholders totalling £22.2 million during the financial year.
The Group focuses on net debt excluding lease liabilities, this reflects the
way the Group's covenants are calculated in its financing facilities. Leverage
compares the ratio of net debt to EBITDA as calculated above, adjusted
Leverage reflects adjustments in the Group's bank facilities to deduct
lease-related EBITDA charges from EBITDA. A full description, calculation and
reconciliation of Alternative Performance Measures is provided in the
explanatory notes at the end of this document.
The Group's banking facilities and amounts drawn in the current and prior
periods are summarised in the table below:
31 January 31 January
2026 2025
Facility £m £m
£160m Revolving Credit Facility (FY25: £125m) 85.0 75.0
Other facilities 1.7 0.4
Gross bank debt 86.7 75.4
The Group's primary financing facilities are comprised of a £160 million
revolving credit facility (RCF), provided by a syndicate of banks, which meets
the investment and working capital needs of the Group. Other facilities are
primarily comprised of local overdrafts used for day-to-day cash management
purposes.
The RCF was extended from £125 million to £160 million on 13 August 2025 in
order to fund the acquisition of Funky Pigeon.
Further, on 31 October 2025, the Group exercised and had approved the first
option to extend the RCF, which will now mature in November 2028. The Group
has a further extension window during FY27, which if exercised and approved
would extend the maturity to November 2029.
The RCF includes a further accordion of up to £40 million, which can be drawn
subject to lender approval. The interest margin on the facilities is dependent
upon the Group's Adjusted Leverage position, with margins between 1.9% and
2.8%. The facility includes covenants for a maximum leverage ratio (calculated
as net debt excluding leases divided by EBITDA less rent costs for the prior
12 months) of 2.5x and a fixed charge cover ratio of at least 1.75x
(calculated as the ratio of EBITDA plus IFRS 16 interest and depreciation to
net finance charges plus IFRS 16 interest and depreciation). The leverage
covenant is consistent with the Group's definition of Adjusted Leverage. The
Group expects to operate comfortably within these covenant levels for the
foreseeable future
At 31 January 2026 the Group had undrawn committed facilities of £73.7
million (FY25: £48.8 million), resulting in total cash and committed
facilities of £92.5 million (FY25: £65.3 million)
The Group's cash generation profile typically follows an annualised pattern,
with higher cash outflows in the first half of the year associated with lower
seasonal sales and investment in working capital ahead of the Christmas
season. The inverse is then usually true in the second half, as Christmas
sales led to reduced stock levels and higher cash inflows. As a result, net
debt at the end of the year is usually lower than the intra-year peak, which
typically occurs during the third quarter and also higher than the intra-year
low which is usually at the end of December. The Group's intra-year working
capital requirement (reflecting the difference between these two points) is
typically £70-80 million).
Capital structure and distributions
The Group has a disciplined capital allocation approach, which aims to balance
investing to deliver the strategy with sustainable, progressive cash returns
to shareholders and long-term growth in shareholder value.
Our capital allocation policy has four key tenets, each with relevant
guardrails and controls designed to ensure balanced application:
1. Maintain a strong balance sheet, targeting a maximum leverage of 1.5x
during the year.
2. Invest to deliver the strategy, investment to accelerate progress must
deliver attractive returns relative to cost of capital.
3. Regular, progressive cash returns to shareholders, via an ordinary
dividend with dividend cover between 2-3x adjusted earnings.
4. Disciplined use of surplus cash, total returns will not exceed free
cash generated.
Investment may include M&A activity, where the Board considers that the
proposed transaction delivers both attractive returns and a significant
enhancement or acceleration to our strategic objectives. However, our
near-term focus is on integration of Funky Pigeon and delivering the
anticipated synergies.
On 30 September 2025, the Board declared an interim dividend for FY26 of 1.3
pence per share which was paid on 12 December 2025 to shareholders on the
register on 7 November 2025.
On 30 October 2025, we commenced a share buyback programme with the intention
to acquire shares to settle future employee share scheme issuances. The
programme concluded on 19 December 2025 at a total cost of £5.0 million. In
aggregate, 5,795,564 shares were acquired and transferred to treasury.
Following a review of the Group's financial performance, prospects, Net Debt
and Leverage position as well as available investment opportunities, the Board
has concluded that the Group has excess cash at the end of FY26, supported by
the strong free cash generation in the period. As a result, we will shortly
commence a share buyback programme with the intention to repurchase up to
£15.0 million of shares during FY27, subject to the normal authority to
repurchase shares being renewed at the upcoming AGM. All shares purchased
under this programme will be cancelled.
The Board remains committed to further share purchases, where required, to
settle future employee share scheme issuances and avoid dilution of existing
shareholdings, subject to relevant approvals being in place. Any requirement
for such purchases will be considered later in FY27.
At the Annual General Meeting to be held on 25 June 2026, the Board will
recommend to shareholders a resolution to pay a final dividend of 3.7 pence
per share for the year. If approved, the dividend will be paid on 3 July 2026,
with a record date of 29 May 2026.
Outlook
Despite the macroeconomic and consumer challenges experienced in FY26, the
Board remains confident in the medium-term growth opportunity for cardfactory,
and we continue to believe in our ability to generate substantial free cash
flows to support sustainable, progressive regular dividends to shareholders,
balanced with continued investment to deliver future growth.
Our mid-term target to deliver mid-single digit percentage growth in sales and
mid-to-high single digit percentage growth in Adjusted PBT is unchanged.
Group sales, excluding the incremental benefit of Funky Pigeon, through the
first three months of the financial year have been in line with the same
period last year.
We are cognisant of the situation in the Middle East, the potential for impact
on direct input costs and the forward-looking uncertainty this creates in
relation to inflation and consumer sentiment.
While we remain mindful of this external backdrop, we expect to deliver
Adjusted PBT in FY27 in line with current market consensus(2).
As in recent years, delivery of Adjusted PBT will be weighted to the second
half of the year.
Matthias Seeger
Chief Financial Officer
28 April 2026
Technical Guidance
Our mid-term financial targets are unchanged:
· Mid-single-digit group revenue growth
· Mid-to-high-single-digit group adjusted PBT growth
· 70-80% conversion of Adjusted earnings to free cash
The principles and guardrails of our capital allocation policy are also
unchanged:
· £20-25 million annual capital expenditure
· Adjusted leverage <1.5x
· Progressive regular dividend
· Dividend cover ratio between 2-3x
The table below provides further technical guidance for the purpose of
building financial models.
Energy & currency hedging Electricity and currency requirements are hedged across a three-year rolling
window, subject to minimum and maximum limits in each year. Currency
requirements for FY27 are fully hedged at rates slightly favourable to those
achieved in FY26. Our electricity requirements for FY27 are 80% hedged. The
average hedged rate for the full year is similar to that achieved in FY26.
IFRS 16 costs Total IFRS 16 costs (depreciation and interest charges combined) will continue
to increase gradually, reflecting the expected increase in size of the store
estate (1-2% per annum). The accounting allocation of costs between
depreciation and interest charges is expected to continue to move gradually
towards a higher interest charge, as leases renew at higher implicit interest
rates than previously.
Depreciation & amortisation We expect underlying non-IFRS 16 depreciation and amortisation charges to
gradually increase until they are more closely aligned with annual capital
expenditure. We expect an increase of approximately £3-£4 million (subject
to the timing of in-year capital expenditure) in FY27. Total depreciation and
amortisation will include amortisation of intangibles related to acquisitions,
which will increase by approximately £1.0 million in FY27 due to
annualisation of the Funky Pigeon acquisition.
Net finance costs Excluding lease-related finance charges, we currently expect net finance costs
to remain flat in FY27. This assumes that free cash generation is in line with
expectations, there are no changes to capital allocation, and interest rates
remain on the current market curve.
Taxation Over the medium term, we expect our effective tax rate to be around the
headline rate of corporation tax in the UK, which is currently 25%.
Capital expenditure Our mid-term expectation is for capital expenditure to be between £20-£25
million. In FY27, we expect to be at the upper end of this range, higher than
in recent years, reflecting planned investment in production facilities at
Printcraft and investments associated with the integration of Funky Pigeon.
Working capital The Group benefits from a relatively short cash cycle due to the majority of
sales being at the till in stores. As the Group builds its wholesale business,
an increasing proportion of sales will be subject to normal trade credit
terms, lengthening the cash cycle. Overall working capital investment is
expected to gradually increase, reflecting overall Group revenue growth
trends.
Free cash Our mid-term target is to deliver free cash of approximately 70-80% of
Adjusted earnings. In FY27, we expect to be at the lower end of this range.
Adjusted leverage We currently expect Adjusted Leverage for FY27 to be between flat and 0.2x
lower
, based on current trading and free cash projections and approved capital
allocation decisions.
Condensed consolidated financial statements
Consolidated income statement for the year ended 31 January 2026
Note 2026 2025
£'m £'m
Revenue 4 582.7 542.5
Cost of sales (394.0) (348.7)
Gross profit 188.7 193.8
Operating expenses 5 (129.3) (114.5)
Operating profit 5 59.4 79.3
Finance income 8 0.3 0.2
Finance expense 8 (15.8) (15.4)
Profit before tax 43.9 64.1
Taxation 9 (12.7) (16.3)
Profit for the year 31.2 47.8
Earnings per share Pence Pence
- Basic 11 9.0 13.8
- Diluted 11 8.9 13.7
All activities relate to continuing operations.
Management assess the underlying performance of the Group based on the
adjusted profit before tax of £56.0 million in FY26 (FY25: £66.0 million).
After tax, this gives adjusted earnings per share of 11.8 pence (FY25: 14.3
pence).
Consolidated statement of comprehensive income
For the year ended 31 January 2026
2026 2025
£'m £'m
Profit for the year 31.2 47.8
Items that may be recycled subsequently into profit or loss:
Exchange differences on translation of foreign operations (0.3) (0.2)
Cash flow hedges - changes in fair value (5.9) 1.4
Cost of hedging reserve - changes in fair value (0.7) (0.1)
Tax relating to components of other comprehensive income 15 1.7 (0.4)
Other comprehensive income for the period, net of income tax (5.2) 0.7
Total comprehensive income for the period attributable to equity shareholders 26.0 48.5
of the parent
Consolidated statement of financial position
As at 31 January 2026
Note 2026 2025
£'m £'m
Non-current assets
Intangible assets 12 388.8 356.5
Property, plant and equipment 13 51.6 48.7
Right of use assets 14 114.8 110.2
Deferred tax assets 15 0.9 0.6
Derivative financial instruments 0.7 0.9
556.8 516.9
Current assets
Inventories 16 58.9 61.1
Trade and other receivables 20.8 17.0
Tax receivable 4.6 1.7
Derivative financial instruments 1.0 2.4
Cash at bank and in hand 17 18.8 16.5
104.1 98.7
Total assets 660.9 615.6
Current liabilities
Borrowings 18 (1.5) (0.1)
Lease liabilities 14 (32.8) (21.7)
Trade and other payables (73.9) (76.8)
Provisions 22 (3.3) (5.4)
Derivative financial instruments (4.9) (0.3)
(116.4) (104.3)
Non-current liabilities
Borrowings 18 (83.8) (73.9)
Lease liabilities 14 (90.4) (88.7)
Deferred tax liabilities 15 (9.9) (1.4)
Provisions 22 (2.5) -
Derivative financial instruments (3.4) (0.4)
(190.0) (164.4)
Total liabilities (306.4) (268.7)
Net assets 354.5 346.9
Equity
Share capital 19 3.5 3.5
Share premium 19 203.8 203.2
Treasury Shares 19 (5.0) -
Hedging reserve (1.8) 1.0
Cost of hedging reserve (0.6) (0.1)
Reverse acquisition reserve (0.5) (0.5)
Merger reserve 2.7 2.7
Translation reserve (0.8) (0.6)
Retained earnings 153.2 137.7
Equity attributable to equity holders of the parent 354.5 346.9
Consolidated statement of changes in equity
For the year ended 31 January 2026
Share capital Share premium Treasury Share Reserve Hedging reserve Cost of Reverse acquisition reserve Merger reserve Translation reserve Retained earnings Total
equity
£'m £'m £'m £'m hedging £'m £'m £'m £'m
£'m
reserve
£'m
At 31 January 2024 3.5 202.7 - (0.6) - (0.5) 2.7 (0.4) 108.4 315.8
Total comprehensive income for the period
Profit or loss - - - - - - - - 47.8 47.8
Other comprehensive income - - - 1.4 (0.1) - - (0.2) (0.4) 0.7
- - - 1.4 (0.1) - - (0.2) 47.4 48.5
Hedging gains/(losses) and costs of hedging transferred to the cost of - - - 0.2 -- -- -- - -- 0.2
inventory
Deferred tax related to Share-based payments -- - - -- - - - - (0.1) (0.1)
Transactions with owners, recorded directly in equity
Shares issued (note 19) - 0.5 - - - - - - - 0.5
Share-based payment charges - - - - - - - - 2.3 2.3
Dividends (note 10) - - - - - - - - (20.3) (20.3)
Total contributions by and distributions to owners - 0.5 - - - - - - (18.0) (17.5)
At 31 January 2025 3.5 203.2 - 1.0 (0.1) (0.5) 2.7 (0.6) 137.7 346.9
Total comprehensive income for the period
Profit or loss - - - - - - - - 31.2 31.2
Other comprehensive income - - - (4.2) (0.5) - - (0.2) (0.3) (5.2)
- - - (4.2) (0.5) - - (0.2) 30.9 26.0
Hedging gains/(losses) and costs of hedging transferred to the cost of - - - 1.9 - -- -- - -- 1.9
inventory
Deferred tax on transfers to inventory -- - - (0.5) - - - - - (0.5)
Deferred tax related to Share-based payments -- - - -- - - - - (0.1) (0.1)
Transactions with owners, recorded directly in equity
Shares issued (note 19) - 0.6 - - - - - - - 0.6
Treasury shares purchased (note 19) - - (5.0) - - - - - - (5.0)
Share-based payment charges - - - - - - - - 2.2 2.2
Dividends (note 10)(1) - - - - - - - - (17.5) (17.5)
Total contributions by and distributions to owners - 0.6 (5.0) - - - - - (15.3) (19.7)
At 31 January 2026 3.5 203.8 (5.0) (1.8) (0.6) (0.5) 2.7 (0.8) 153.2 354.5
(1) Dividends include £0.3 million of dividend equivalents payable on
employee share awards.
Consolidated cash flow statement
For the year ended 31 January 2026
Note 2026 2025
£'m £'m
Cash from operations 20 122.3 105.6
Corporation tax paid (12.0) (16.7)
Net cash inflow from operating activities 110.3 88.9
Cash flows from investing activities
Interest received on bank deposits 0.3 0.2
Purchase of property, plant and equipment 13 (11.7) (11.4)
Purchase of intangible assets 12 (7.7) (7.0)
Acquisition of subsidiaries net of cash acquired 25 (25.7) (22.5)
Proceeds from disposal of fixed assets - 0.2
Net cash outflow from investing activities (44.8) (40.5)
Cash flows from financing activities
Interest paid on bank borrowings 8 (6.5) (6.4)
Proceeds from bank borrowings 18 238.0 258.5
Repayment of bank borrowings 18 (228.2) (228.5)
Other financing costs paid 8 (0.2) (1.6)
Shares issued under employee share schemes 19 0.6 0.5
Treasury Shares purchased 19 (5.0) -
Payment of lease liabilities 14 (37.0) (37.6)
Interest paid in respect of lease liabilities 14 (8.7) (8.0)
Dividends paid (17.2) (19.8)
Net cash outflow from financing activities (64.2) (42.9)
Impact of changes in foreign exchange rates (0.4) (0.1)
Net increase/(decrease) in cash and cash equivalents 0.9 5.4
Cash and cash equivalents at the beginning of the year 16.5 11.1
Closing net cash and cash equivalents 17 17.4 16.5
Notes to the condensed consolidated financial statements
1 General information
Card Factory plc ('the Company') is a public limited company incorporated in
the United Kingdom. The Company is domiciled in the United Kingdom and its
registered office is Century House, Brunel Road, 41 Industrial Estate,
Wakefield WF2 0XG.
The Group financial statements consolidate those of the Company and its
subsidiaries (together referred to as the 'Group').
2 Basis of preparation
This preliminary announcement and condensed consolidated financial statements
have been prepared in accordance with the recognition and measurement
principles of UK-adopted International Accounting Standards ('UK-IFRS') in
conformity with the requirements of the Companies Act 2006.
It does not include all the information required for full annual accounts. The
financial information contained in this preliminary announcement does not
constitute the company's statutory accounts for the years ended 31 January
2026 ('FY26') or 31 January 2025 ('FY25') but is derived from these accounts.
Statutory accounts for the year ended 31 January 2025 have been delivered to
the registrar of companies, and those for the year ended 31 January 2026 will
be delivered to the registrar in due course. The auditor has reported on those
accounts; the audit reports were (i) unqualified, (ii) did not include a
reference to any matters to which the auditor drew attention by way of
emphasis without qualifying their report and (iii) did not contain a statement
under section 498 (2) or (3) of the Companies Act 2006.
Going concern basis of accounting
The Board continues to have a reasonable expectation that both the Group and
the parent company have adequate resources to continue in operation for at
least the next 12 months and that the going concern basis of accounting
remains appropriate.
The Group has delivered a profitable and cash generative financial performance
in the current financial year in the face of significant external market
pressures. Trading since the balance sheet date has remained in line with
expectations and there have been no material events that have adversely
affected the Group's liquidity headroom.
In August 2025, the Group exercised £35 million of the Accordion option
(which was subject to lender approval) within our existing £125 million
revolving credit facility, entered into in April 2024 (see note 18). This
option, exercised to fund the acquisition of Funky Pigeon, extended the
available facility to £160 million. There was no change to the other key
terms of the facility as a result of this option being exercised.
The facilities had an initial maturity date of April 2028, which was extended
to November 2028 on 13(th) October 2025. The facilities include £40 million
of remaining accordion, which can be drawn subject to lender approval. The
interest margin on the facilities is dependent upon the Group's leverage
position, with margins between 1.9-2.8%. The facilities include covenants for
a maximum leverage ratio (calculated as net debt excluding leases divided by
EBITDA less rent costs for the prior 12 months) of 2.5x and a fixed charge
cover ratio of at least 1.75x. The Group expects to operate comfortably within
these covenant levels for the foreseeable future. The Group has a further
extension option, subject to lender approval, which would further extend the
term of the facilities to November 2029.
The Board believes that the updated facilities provide adequate headroom for
the Group to operate and execute its strategic plan. At 31 January 2026, net
debt (excluding lease liabilities) was £67.9 million and the Group had £73.7
million of available undrawn facilities.
The UK Corporate Governance Code requires that an assessment is made of the
Group's ability to continue as a going concern for a period of at least 12
months from the signing of these financial statements; however, it is not
specified how far beyond 12 months should be considered.
For the purpose of assessing the going concern assumption, the Group has
prepared cash flow forecasts for the 12-month period following the date of
approval of these accounts, which incorporate our debt facilities and related
covenant measures.
These forecasts are extracted from the Group's approved budget and strategic
plan which covers a period of five years. Within the 12-month period, the
Group has considered qualitative scenarios and the Group's ability to operate
within its existing banking facilities and meet covenant requirements. Beyond
the 12-month period, the Group has qualitatively considered whether any
factors (for example the timing of debt repayments, or longer-term trading
assumptions) indicate a longer period warrants consideration.
The results of this analysis were:
· The Group's base case forecasts indicate that the Group will
continue to trade profitably, generate positive operating cash flows and
retain considerable liquidity headroom against facility limits whilst meeting
all covenant requirements on the relevant test dates (see note 18 for more
information in respect of covenant requirements) in the 12-month period.
· In the Board's view, there are no other factors arising in the
period immediately following 12 months from the date of signing these accounts
that warrant further consideration.
· Scenario analysis, which considered a reduction in sales,
profitability and cash flows on a permanent basis indicated that the Group
would maintain liquidity headroom and covenant compliance throughout the
12-month period. The analysis did not consider any potential upside from
mitigating actions that could be taken to reduce discretionary costs as well
as timing of cash outflows, which could both significantly increase the
headroom further.
The Group conducted a reverse stress test analysis which considered the extent
of sales loss or cost increase that would be required to result in either a
complete loss of liquidity headroom or a breach of covenants associated with
the Group's financing. Seasonality of the Group's cash flows, with higher
purchases and cash outflows over the summer to build inventory for Christmas,
means liquidity headroom is at its lowest in September and October ahead of
the Christmas season. Conversely, covenant compliance is most sensitive around
the year-end.
The reverse stress test analysis demonstrated that the level of sales loss or
cost increase required to result in either a covenant breach or exhausting
liquidity would be unprecedented for a period where stores are open and
trading, this scenario also did not factor in any possible mitigating actions
that management could take. Accordingly, we consider that the chance of such
scenarios occurring are remote.
Over recent years, the business has demonstrated a significant degree of
resilience and a proven ability to manage cash flows and liquidity during a
periods of economic downturn. Accordingly, the Board retains confidence that,
were such a level of downturn to reoccur in the assessment period, the Group
would be able to take action to mitigate its effects, such as closing stores
to reduce costs as seen through the pandemic.
We are mindful of the macroeconomic uncertainty created by recent geopolitical
developments including the current conflict in the Middle East and have
assessed incremental costs to date into our plans for the coming financial
year.
Based on these factors, the Board has a reasonable expectation that the Group
has adequate resources and sufficient loan facility headroom to continue to
trade for the foreseeable future and accordingly the accounts are prepared on
a going concern basis.
Accounting judgements and estimates
The preparation of financial statements in conformity with UK IFRS requires
judgement to be applied in forming the Group's accounting policies. It also
requires the use of estimates and assumptions that affect the reported amount
of assets, liabilities, income and expenses. Actual results may subsequently
differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to estimates are recognised prospectively in the period in which the
estimate is revised.
Judgements are also reviewed on an ongoing basis to ensure they remain
appropriate. The Group does not consider there to be any key judgements made
in the current period that have had a significant material effect on the
amounts recognised in the financial statements.
Key sources of estimation uncertainty
The key sources of estimation uncertainty, being those estimates and
assumptions that carry the most significant risk of a material adjustment to
the carrying amounts of assets and liabilities in the next financial year, are
set out below.
Inventory provisioning
The Group holds significant volumes, and a broad range of inventory across its
stores, distribution centres and online fulfilment centres. The Group
calculates an inventory provision to cover the risk that the net realisable
value of inventory is lower than its cost. This provision is calculated in
accordance with an established, documented policy, that is based on historical
experience and the Group's inventory management strategy, which determines the
range of products that will be available for sale in-store and online.
Provisions are made against inventory that is no longer on the Group's
merchandising plan, is expected to be removed from that plan in the near
future, or where ranges do not perform as anticipated. The amounts provided
are calculated by product line and are adjusted annually to reflect
experience.
There were no changes to the Group's inventory provisioning policy in FY26. In
accordance with that policy, the categorisation of inventory for provisioning
purposes and the provision rate applied to each category were reviewed and,
where appropriate, updated based on the latest available range plans,
inventory holdings and sell-through data. These routine updates to reflect
experience have contributed to the increase in the value of the provision
compared to the prior year.
At the end of FY26, the total inventory provision was £10.6 million (FY25:
£8.2 million). The increase in the value of the provision year-on-year
generally reflects movements in our current merchandising plan compared with
the prior year as the proportion of inventory considered as unranged or
discontinued has increased leading to an increase in the overall provision
rate. There is no material incremental impact on the inventory provision as a
result of the acquisition of Funky Pigeon.
The full range of reasonably possible outcomes in respect of the provision is
difficult to calculate at the balance sheet date as it is dependent on the
accuracy of forecasts for sales volumes and future decisions we may take on
aged, discontinued and potentially excess inventory in response to market and
supply developments. The Group believes it has taken a balanced approach in
calculating the provision. The provision applied is based on the application
of sell-through rates in the previous financial year. If the rates applied
were changed +/-5% this would cause a +/-£1.5m movement in the overall value
of the provision.
Other sources of judgment and estimation uncertainty
Impairment testing
An impairment review is conducted annually in respect of goodwill, and as
required for other assets and cash-generating units ('CGUs') where an
indicator of potential impairment exists. The carrying amounts of the assets
involved and the level of estimation uncertainty inherent in determining
appropriate assumptions for the calculation of the assets' recoverable amounts
means impairment reviews are an area of significant management focus.
However, whether that estimation uncertainty is significant to the financial
statements is not known until the analysis is concluded. The Group generally
considers the estimation uncertainty in impairment reviews to be significant
if a reasonably possible change in the key assumptions would lead to a
material change in the accounting outcome.
Goodwill
The carrying amount of goodwill in the consolidated balance sheet totals
£329.9 million of which £8.7 million is allocated entirely to the Garven
CGU, £7.4 million is allocated entirely to the Funky Pigeon CGU and £313.8
million is allocated in its entirety to the group of CGUs, shared assets and
functions that comprise the Group's Stores business.
In FY26, the Group conducted an impairment review in respect of goodwill and
noted no reasonably possible change in assumptions that would lead to an
impairment charge being recognised against Goodwill in any of the stores,
Garven or Funky Pigeon CGUs. The methodology and assumptions considered are
described in more detail in note 12.
Right of use assets and Tangible assets
The Group considers individual stores to be the smallest group of assets that
generate independent cash inflows. The store portfolio is assessed for
indicators of potential impairment, or impairment reversal on a store-by-store
basis.
Where an indicator was identified as at 31 January 2026, the Group conducted a
store-level impairment review covering the right-of-use assets and property
plant and equipment insofar as they are directly attributable to those stores.
The Group estimates the value in use each store assessed using future cash
flows derived from the forecasts included in the Group's latest approved
budget, plus an allocation of shared overheads based on a line by line
analysis of those costs.
Intangible assets
Following the acquisition of Funky Pigeon in August 2025, the Group has
reviewed the current and likely future operating model of its digital
business. Following a period of transition and integration, it is expected
that most of the existing intangible assets in the Card Factory Online CGU
will become obsolete during the FY27 fiscal year. As a result, an impairment
charge of £3.2 million has been recognised during FY26, to write down these
assets in full.
Approach and results
The Group assessed the recoverable amount of these CGUs on a value in use
basis, using consistent assumptions across all reviews where applicable, with
estimates of future cash flows derived from forecasts included within the
Group's approved budget adjusted to exclude cash flows from new stores and
initiatives so as to assess the assets in their current state and condition.
Where impairment reviews are prepared in respect of assets not yet ready for
use, future development costs and revenues are not excluded so as to fairly
reflect the value of the assets being developed and costs to complete. The
assessment of future cash flows that underpin such impairment reviews
inherently require the use of estimates, notably in respect of future
revenues, operating costs including material, freight, wage and energy
inflation, terminal growth rates, foreign currency exchange rates, and
discount rates.
The results of the impairment tests are set out in note 12 (intangible assets)
and note 14 (leases) which includes the key assumptions considered. The
goodwill impairment tests in respect of the stores business, Garven and Funky
Pigeon had significant headroom and accordingly, having undertaken scenario
analysis on the key assumptions, the Group does not believe there are any
reasonably possible changes in those key assumptions that would lead to an
impairment charge.
Each of the impairment reviews performed includes an allocation of central
overheads to the relevant CGU or, where a reasonable or consistent allocation
of such overheads cannot be applied to a lower level, to a group of CGUs. The
nature of the Group's operations, with centralised support resource for all
business units and vertically integrated value chain, means allocation of
central overheads to CGUs inherently involves judgement.
The Group recorded a net impairment charge of £1.4 million in respect of
stores, which is comprised of £2.8 million of impairment charges and £1.4
million of impairment reversals. The reversals reflect those stores where an
impairment charge made in a prior period has been reversed due to improved
trading and outlook. The net impairment charge in the current year included a
net charge to impairment on Right of use assets of £1.1 million and a net
charge to PPE of £0.3 million.
Central overheads are allocated to individual stores on a pro-rata basis
applying appropriate volumetric measures where it is considered the overhead
is directly and necessarily incurred in generating the returns from that
store. We have reviewed the way that we allocate central overheads in FY26 and
updated the process for further allocation of overheads that are applied to
the Group of CGUs comprising the whole stores business as a portfolio, where
the cost is indirectly attributable to running or supporting the store estate,
but an allocation of those costs to individual stores cannot be made on a
reasonable and consistent basis.
The Group considered a range of feasible alternative allocations of central
overhead based on different scenarios and differing judgements regarding the
allocation of specific cost items. This analysis indicated a potential range
of impairment charges between £0.6 million and £2.7 million. The Group
believes that the position adopted in the financial statements represents a
balanced view of central overheads that are necessarily incurred and can be
allocated to individual stores on a reasonable and consistent basis.
Having considered scenarios consistent with those reviewed in the goodwill
impairment tests, the Group is satisfied that there are no other reasonable
changes in key assumptions that would result in a material change in the
impairment charge recorded for stores.
Identification and valuation of intangible assets arising on the acquisition
of Funky Pigeon
Under IFRS 3, Business Combinations, the identification of intangible assets
acquired in a business combination requires a degree of judgement. This
judgement involves determining whether identifiable intangible assets exist
apart from goodwill and recognising them separately. An intangible asset is
identifiable if it meets either the separability criterion or the
contractual-legal criterion.
As a result of the acquisition of Funkypigeon.com Limited ('Funky Pigeon') on
14 August 2025, management consider that the intangible assets identified as
part of the acquisition meet the separability criterion and although there is
judgement involved in reaching this conclusion, we do not consider that a
significant degree of judgement was required in making this determination. In
making this judgement, we considered other possible intangible assets that
could be recognised but concluded that either they did not meet the above
criteria or had a trivial fair value.
The Group have recognised both goodwill and intangible assets associated with
existing customer relationships and branding of the acquired business.
Management have engaged a specialist to perform a valuation of the intangible
assets using the Multi-Period Excess Earnings Method (MPEEM) to determine the
fair value of the customer relationships and the Relief from Royalty Method
(RFR) to determine the fair value of the brand acquired.
Both the MPEEM and RFR valuation methods relied on several key assumptions in
reaching a valuation for the customer relationships and branding. The MPEEM
method used forecast cashflows of the acquired business in order to generate
the present value of future cashflows which represents the fair value of the
assets acquired. The key assumptions in the Customer Relationship valuation
include the growth rate of sales, the discount rate applied and the retention
rate of existing customer relationships. The RFR method values the brand using
the projected future revenues of the acquired business and applying a
benchmarked royalty rate to determine the fair value of the brand acquired.
Any adjustments to the valuations assessed would be a reclassification between
Goodwill and Intangible assets at the point of acquisition with no impact on
the profit of the Group and any reported profit impact of a change in
amortisation would be immaterial in FY26.
Climate Change
The Group has reviewed the potential impact of climate change and ESG-related
risks and uncertainties on the consolidated financial statements. Given the
nature of the Group's business and operations, the exposure to both physical
and transitional risks associated with climate change is considered to be low.
In particular, the Group has considered climate change in respect of
impairment testing (potential impact of climate and ESG risks on estimates of
future cash flows, note 12), going concern (note 2), and inventory provisions
(impact of customer preferences and ESG considerations on potential inventory
obsolescence, note 16) and concluded in each case that there is no material
impact in each area at 31 January 2026.
3 Principle accounting policies
The preliminary announcement has been prepared using accounting policies that
are consistent with those published in the Group's accounts for the year-ended
31 January 2025 (available on the Company's website).
Amended standards and interpretations effective in the period do not have a
material effect on the Group's financial statements.
The Group made a minor change to the accounting policy in respect of acquired
intangible assets, following the recognition of assets related to the
acquisition of Funkypigeon.com Limited in FY26.
Acquired intangible assets
Intangible assets that are acquired by the Group as a result of business
combinations are recorded at fair value at the acquisition date and stated on
an ongoing basis as fair value less accumulated amortisation and less any
accumulated impairment losses.
Amortisation is recognised in profit or loss on a straight-line basis over the
estimated useful lives of intangible assets, other than goodwill, from the
date that they are available for use, since this most closely reflects the
expected pattern of consumption of the future economic benefits embodied in
the asset. The estimated useful lives for the current and comparative periods
are as follows:
· Customer relationships and Brands - 10-15 years.
The Group also updated its accounting policy wording regarding revenue to
better reflect the various revenue streams around the Group and to account for
the inclusion of revenue from Funky Pigeon in FY26.
Revenue
Retail revenue
Group revenue is principally attributable to the retail sale of cards, gifts
and celebration essentials subject to a single performance obligation
fulfilled by receipt of goods at the point of payment with minimal returns and
refunds. Revenue is recognised net of discounts and VAT at the point of
completing the physical sale in stores. Such revenue is allocated wholly to
the cardfactory stores operating segment as seen in note 4.
Digital revenue
Revenue from online sales is recognised net of VAT, net of discounts and
incorporates postage revenue received as part of the overall sales price. The
delivery of goods to the customer is the point when IFRS 15 'performance
obligations' are deemed to have been satisfied. Customers may make advance
payments in respect of goods or services to be provided in future periods.
Such amounts are deferred and only recognised as revenue when the goods or
services are delivered to the customer on subsequent orders.
Wholesale partnerships revenue
For the wholesale partnerships operating segment, revenue attributable to
wholesale sales to business customers is typically recognised at a point in
time based on a single performance obligation supplying standard Group
products. The timing of the single performance obligation can vary from
contract to contract, including from the point of dispatch (whether from a
site controlled by the Group, or from a third-party supplier), delivery to the
customer's site or in the case of some retail partners the point of sale to
end consumer. A right of return is not a separate performance obligation and
the Group recognises revenue net of estimated returns and net of anticipated
rebates. Payment terms for retail partners are typically 30-90 days from
invoicing.
The Group also updated its accounting policy for Share Capital as a result of
the commencement of purchases of its own share.
Share capital
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new shares are shown in equity as a deduction
from the proceeds.
Where the Group purchases its own shares, such shares are measured at cost
(including directly applicable transaction costs) and deducted from equity.
Shares held in treasury are presented in a separate treasury shares reserve
until reissued or cancelled. Shares held in treasury do not receive dividend
payments and are excluded from the calculation of average shares in issue for
the purpose of calculating earnings per share.
4 Segmental reporting
The Group is organised into four main business areas which meet the definition
of an Operating segment under IFRS, those being cardfactory stores, digital,
wholesale partnerships and Printcraft. Each of these business areas has a
dedicated management team and reports discrete financial information to the
Board for the purpose of decision making.
· cardfactory stores sells greeting cards, celebration accessories,
and gifts to consumes through an extensive network of retail stores across
high streets, retail parks and shopping centres in the UK and the Republic of
Ireland.
· Digital sells greeting cards, celebration essentials and gifts to
consumers via its online platforms. The digital business has operated
cardfactory.co.uk throughout FY26 and FY25, funkypigeon.com since 14 August
2025, and gettingpersonal.co.uk until its closure on 31 January 2025. This
segment has been reflected in both FY26 and FY25.
· Wholesale partnerships represents the Group's "B2B" wholesale
operations and sells greetings cards, celebration essentials and gifts via a
network of third-party retail partners both in the UK and overseas.
· Printcraft is a manufacturer of greeting cards and personalised
gifts and sells the majority of its output intra-group to the stores and
digital businesses.
Following its acquisition on 14 August 2025, Funky Pigeon has been integrated
into the existing Digital business, with a common management structure.
The Group acquired SA Greetings on 25 April 2023, Garlanna Holdings Limited on
4 September 2024 and Garven Holdings, LLC on 04 December 2024. All three
business' principal activities relate to the sale of cards, gifts and/or
celebration essentials to business customers, and therefore the results of SA
Greetings, Garven and Garlanna are included in the wholesale partnerships
operating segment for the purposes of segmental reporting. The accounting
policies applied in preparing financial information for each of the Group's
segments are consistent with those applied in the preparation of the
consolidated financial statements. The Group's support centre and
administrative functions are run by the cardfactory stores segment, with
operating costs recharged to other segments where they are directly
attributable to the operations of that segment.
The Board reviews revenue and EBITDA by segment, with the exception of
Printcraft by virtue of its operations being predominantly intra-group in
nature. Note that under IFRS EBITDA is considered to be a non-GAAP measure as
considered in the explanatory notes at the end of this document.
Revenue and EBITDA for each segment, and a reconciliation to the consolidated
operating profit per the financial statements, is provided in the table below:
2026 2025
£'m £'m
Revenue:
cardfactory Stores 514.6 506.8
Digital 20.6 13.2
Wholesale Partnerships 47.2 22.2
Other 0.3 0.3
Consolidated Group revenue 582.7 542.5
Of which derived from customers in the UK 522.9 509.8
Of which derived from customers overseas 59.8 32.7
EBITDA(1):
cardfactory Stores 118.1 131.8
Digital (3.5) (6.3)
Wholesale Partnerships 3.2 1.0
Other (1.0) 1.0
Consolidated Group EBITDA(1) 116.8 127.5
Consolidated Group depreciation, amortisation & impairment (58.1) (48.1)
Consolidated Group gain on disposal 0.7 (0.1)
Consolidated Group Operating Profit 59.4 79.3
(1)This is an Alternative Performance Measure not defined under IFRS
The "Other" category principally reflects central overheads, Printcraft sales
to third parties and consolidation adjustments not impacting another operating
segment.
Group revenue is predominantly derived from retail customers. Average
transaction value is low and products are transferred at the point of sale.
Group revenue is presented as a single category as, by segment, revenues are
subject to substantially the same economic factors that impact the nature,
amount, timing and uncertainty of revenue and cash flows. The types of
products sold via each operating segment are fundamentally similar in nature
and it is the channel or location of sale that differs. As such, we consider
that the segmental analysis above provides a reasonable breakdown of sales by
product type.
The table below sets out a geographical analysis of revenues for the current
and prior year:
2026 2025
£'m £'m
Revenue derived from customers in the UK 522.9 509.8
Revenue derived from customers overseas:
- South Africa 11.8 11.6
- Republic of Ireland 20.5 15.4
- United States of America 24.9 3.1
- Rest of the World 2.6 2.6
Consolidated revenue 582.7 542.5
Of the Group's non-current assets, £16.1 million (2025: £9.6 million)
relates to assets based outside of the UK, principally in relation to the
Group's stores in the Republic of Ireland and wholesale operations within the
Republic of Ireland, United States and South Africa. Non-current assets
related to stores based in the Republic of Ireland are £9.2 million as at 31
January 2026 (FY25: £6.4 million). Non-current assets related to wholesale
operations are £1.6 million in the Republic of Ireland (FY25: £0.2 million),
£0.2 million in the United States (FY25: £0.1 million) and are £5.0 million
(FY25: £4.6 million) in South Africa.
5 Operating profit
Operating profit is stated after charging/(crediting) the following items:
2026 2025
£'m £'m
Staff costs (note 7) 185.0 174.5
Depreciation expense
- owned fixed assets (note 13) 9.7 8.7
- right of use assets (note 14) 37.3 36.3
Amortisation expense (note 12) 6.5 3.5
Net Impairment charge / (reversal) of right-of-use assets (note 14) 1.1 (0.4)
Impairment of tangible assets (note 13) 0.3 -
Impairment of intangible assets (note 12) 3.2 -
(Profit)/loss on disposal of fixed assets (0.7) 0.1
Impact of unrealised losses/(gains) on derivative contracts 4.7 (1.5)
Other foreign exchange losses 0.8 2.3
The total fees payable by the Group to Forvis Mazars LLP and their associates
during the period was as follows:
2026 2025
£'000 £'000
Audit of the consolidated and Company financial statements 91 77
Amounts receivable by the Company's auditor and its associates in respect of:
Audit of financial statements of subsidiaries of the Company 686 624
Audit-related assurance services 93 92
Total fees 870 793
6 EBITDA
EBITDA represents profit for the period before net finance expense, taxation,
gains or losses on disposal, depreciation, amortisation and impairment
charges/reversals.
2026 2025
£'m £'m
Operating profit 59.4 79.3
Depreciation, amortisation and impairment 58.1 48.1
(Gain) / loss on disposal (0.7) 0.1
EBITDA(1) 116.8 127.5
(1)This is an Alternative Performance Measure not defined under IFRS which is
defined and reconciled in the explanatory notes at the end of this document
7 Employee numbers and costs
The average number of people employed by the Group (including Directors)
during the year, analysed by category, was as follows:
2026 2025
Number Number
Management, administration and support functions 778 773
Retail and warehouse operations 9,171 9,748
9,949 10,521
The aggregate payroll costs of all employees including Directors were as
follows:
2026 2025
£'m £'m
Employee wages and salaries 160.7 154.3
Equity-settled share-based payment expense 2.3 2.3
Social security costs 15.1 11.1
Defined contribution pension costs 2.5 2.3
Total employee costs 180.6 170.0
Agency labour costs 4.4 4.5
Total staff costs 185.0 174.5
Key management personnel
The key management personnel of the Group comprise the Card Factory plc Board
of Directors and the Executive Board.
Key management personnel compensation is as follows:
2026 2025
£'m £'m
Salaries and short-term benefits 6.4 7.9
Equity-settled share-based payment expense 2.0 2.0
Social security costs 0.9 1.1
Defined contribution pension costs 0.1 0.1
9.4 11.1
Remuneration of Directors
2026 2025
£'m £'m
Directors' remuneration 1.1 1.3
Amounts receivable under long-term incentive schemes 0.4 0.8
Company contributions to defined contribution pension plans - -
1.5 2.1
The table above includes the remuneration of Directors in each year.
Amounts receivable under long-term incentive schemes reflects the value of
options exercised during the year.
Further details of the remuneration of the current directors are disclosed in
the Directors' Remuneration Report in the final Annual Report. The basis of
calculation for certain items described in the Directors' Remuneration Report
may differ to that used in this note, reflecting differences in the relevant
regulations.
8 Net finance expense
2026 2025
£'m £'m
Net finance expense
Interest on bank loans and overdrafts 6.5 6.4
Interest received (0.3) (0.2)
Other finance costs(1) 0.6 1.0
Lease interest 8.7 8.0
15.5 15.2
( )
(1)Other finance costs includes loan issue cost amortisation and other
financing costs
9 Taxation
The tax charge includes both current and deferred tax. The tax charge reflects
the estimated effective tax on the profit before tax for the Group for the
year ended 31 January 2026 and the movement in the deferred tax balance in the
year, so far as it relates to items recognised in the income statement.
Taxable profit or loss differs from profit or loss before tax as reported in
the income statement, because it excludes items of income or expenditure that
are either taxable or deductible in other years or never taxable or
deductible.
Recognised in the income statement
2026 2025
£'m £'m
Current tax charge/(credit)
Current year 13.0 16.5
Adjustments in respect of prior periods (4.0) (1.5)
Total current tax charge 9.0 15.0
Deferred tax charge/(credit)
Origination and reversal of temporary differences (0.2) (0.2)
Adjustments in respect of prior periods 3.9 1.5
Total deferred tax charge 3.7 1.3
Total income tax charge 12.7 16.3
The effective tax rate of 28.9% (2025: 25.4%) on the profit before taxation
for the year is higher than (2025: higher than) the average rate of
corporation tax in the UK for the year of 25% (2025: 25%) driven by expenses
not deductible for tax purposes increasing in FY26, primarily as a result of
the annualisation of acquisition-related costs and the acquisition of Funky
Pigeon.
The tax charge is reconciled to the standard rate of UK corporation tax as
follows:
2026 2025
£'m £'m
Profit before tax 43.9 64.1
Tax at the standard UK corporation tax rate of 25.0%(1) (FY25: 25.0%) 11.0 16.0
Tax effects of:
Expenses not deductible for tax purposes 2.2 0.5
Effects of timing differences (0.3) -
Adjustments in respect of prior periods (0.1) -
Effect of overseas tax rates (0.1) (0.2)
Total income tax charge 12.7 16.3
Total taxation recognised through the income statement, other comprehensive
income and through equity are as follows:
2026 2025
Current Deferred Total Current Deferred Total
£'m £'m £'m £'m £'m £'m
Income statement 9.1 3.6 12.7 15.0 1.3 16.3
Other comprehensive income - (1.7) (1.7) - 0.4 0.4
Equity - 0.6 0.6 - 0.1 0.1
Total tax 9.1 2.5 11.6 15.0 1.8 16.8
10 Dividends
On 27 June 2025, the Group paid a final dividend of 3.6 pence per share
(totalling £12.6 million) in respect of the FY25 financial year. This brought
total dividends paid in respect of FY25 to 4.8 pence per share (totalling
£16.8 million).
On 12 December 2025, the Group paid an interim dividend of 1.3 pence per share
(totalling £4.6 million) in respect of the FY26 financial year.
FY26 final dividend
At the forthcoming Annual General Meeting, the Board will recommend to
shareholders that a resolution is passed to approve payment for a final
dividend for the year ended 31 January 2026 of 3.7 pence per share, equivalent
to approximately £13.0 million. The final dividend will be payable to
shareholders on the share register on 29 May 2026, with payments to be made on
3 July 2026.
Dividends paid in the year: Pence per share 2026 2025
£'m £'m
Final dividend for the year ended 31 January 2024 4.5p - 15.6
Interim dividend for the year ended 31 January 2025 1.2p - 4.2
Final dividend for the year ended 31 January 2025 3.6p 12.6 -
Interim dividend for the year ended 31 January 2026 1.3p 4.6 -
Total dividends paid to shareholders in the year 17.2 19.8
Dividend equivalents totalling £0.3 million (2025: £0.5 million) were
accrued in the year in relation to share-based long-term incentive
schemes.
11 Earnings per share
Basic earnings per share is calculated by dividing the profit for the period
attributable to ordinary shareholders by the weighted average number of
ordinary shares in issue during the period. Shares held in Treasury Reserve
are excluded from the shares in issue as they do not hold any voting rights or
attract any dividends.
Diluted earnings per share is based on the weighted average number of shares
in issue for the period, adjusted for the dilutive effect of potential
ordinary shares. Potential ordinary shares represent employee share incentive
awards and save as you earn share options.
2026 2025
(Number) (Number)
Weighted average number of shares in issue 348,196,571 346,910,019
Weighted average number of dilutive share options 771,642 2,295,420
Weighted average number of shares for diluted earnings per share 348,968,213 349,205,439
£'m £'m
Profit for the financial period 31.2 47.8
Pence pence
Basic earnings per share 9.0 13.8
Diluted earnings per share 8.9 13.7
Adjusted EPS, which excludes the post-tax effect of items excluded from
Adjusted PBT in the period, is equal to 11.8 pence per share (FY25: 14.3 pence
per share). Adjusted Diluted Earnings Per Share is equal to 11.8 pence per
share (FY25: 14.2 pence per share). These are Alternative Performance Measures
not defined under IFRS which is defined and reconciled in the explanatory
notes at the end of this document.
12 Intangible assets
Goodwill Acquired Customer Relationships Acquired Brands £'m Software Total
£'m £'m £'m £'m
Cost
At 1 February 2025 336.9 12.2 0.7 42.0 391.8
Additions - - - 7.7 7.7
Acquisitions (note 25) 7.4 11.5 8.2 7.2 34.3
Derecognition on cessation of trade (14.4) - - - (14.4)
At 31 January 2026 329.9 23.7 8.9 56.9 419.4
Amortisation/impairment
At 1 February 2025 14.4 0.3 - 20.6 35.3
Amortisation in the period - 1.8 0.3 4.4 6.5
Impairment in the period - - - 3.2 3.2
Derecognition on cessation of trade (14.4) - - - (14.4)
At 31 January 2026 - 2.1 0.3 28.2 30.6
Net book value
At 31 January 2026 329.9 21.6 8.6 28.7 388.8
At 31 January 2025 322.5 12.0 0.6 21.4 356.5
During the year the Group has derecognised the cost and accumulated impairment
(with a net book value of £nil) associated with goodwill allocated to the
Getting Personal CGU, which ceased to trade on 31 January 2025.
As at 31 January 2026, the Group held £6.3 million of assets under
construction within Software (FY25: £3.5 million). These assets do not
amortise until brought into use. Software assets include individually material
assets relating to core, integrated business systems with a net book value of
£8.4 million and a remaining useful life of approximately 8 years.
Goodwill Acquired Customer Relationships Acquired Brands Software Total
£'m £'m £'m £'m £'m
Cost
At 1 February 2024 328.2 - - 35.0 363.2
Additions - - - 7.0 7.0
Acquisitions (note 25) 8.7 12.2 0.7 - 21.6
At 31 January 2025 336.9 12.2 0.7 42.0 391.8
Amortisation/impairment
At 1 February 2024 14.4 - - 17.4 31.8
Amortisation in the period - 0.3 - 3.2 3.5
At 31 January 2025 14.4 0.3 - 20.6 35.3
Net book value
At 31 January 2025 322.5 11.9 0.7 21.4 356.5
At 31 January 2024 313.8 - - 17.6 331.4
Goodwill
The carrying amount of goodwill is allocated to the following cash generating
units:
2026 2025
£'m £'m
cardfactory Stores 313.8 313.8
Garven Holdings 8.7 8.7
Funky Pigeon 7.4 -
Total goodwill 329.9 322.5
£313.8 million of goodwill is allocated to the cardfactory stores business,
which is comprised of all of the cardfactory stores (each an individual CGU
for asset impairment testing purposes), associated central functions and
shared assets. The portfolio of cardfactory Stores is the lowest level at
which the Group's management monitors goodwill related to stores internally.
The total carrying amount of the cardfactory stores group of CGUs for
impairment testing purposes, inclusive of liabilities that are necessarily
considered in determining the recoverable amount, at 31 January 2025 was
£362.7 million (FY25: £374.6 million).
As a result of the acquisition of Garven Holdings, LLC in FY25, £8.9 million
of goodwill was recognised by the Group and allocated wholly to the Garven
CGU, which forms part of the wholesale partnerships operating segment. The
total carrying amount of the Garven CGU for impairment purposes, inclusive of
liabilities that are necessarily considered in determining the recoverable
amount, at 31 January 2026 was £10.6 million (FY25: £10.9 million).
As a result of the acquisition of Funkypigeon.com Limited on 14 August 2025,
the Group have recognised both goodwill and intangible assets associated with
existing customer relationships and branding of the acquired business. The
valuation of the intangible assets was performed using the Muti-Period Excess
Earnings Method (MPEEM) to determine the fair value of the customer
relationships and the Relief from Royalty Method (RFR) to determine the fair
value of the brand acquired.
Both the MPEEM and RFR valuation methods relied on several key assumptions in
reaching a valuation for the customer relationships and branding. The MPEEM
method used forecast cashflows of the acquired business in order to generate
the present value of future cashflows which represents the fair value of the
assets acquired. The key assumptions in the Customer Relationship valuation
include the growth rate of sales, the discount rate applied and the retention
rate of existing customer relationships. The RFR method values the brand using
the projected future revenues of the acquired business and applying a
benchmarked royalty rate to determine the fair value of the brand acquired.
Customer relationships and Brands are intangible assets with a definite life,
the average remaining useful life of these classes of assets are:
· Brand - 14 years and 2 months
· Customer relationships - 9 years and 2 months
Impairment Testing
The Group has completed an impairment test as at 31 January 2026 in respect of
the goodwill allocated to the stores, Garven and Funky Pigeon CGUs.
In each case, the recoverable amount was determined based on a value-in-use
calculation. The cash flows used in the value-in-use calculation were based on
the Group's most recently approved five-year plan, adjusted where necessary to
exclude the costs and benefits associated with future investments or
initiatives (such as, for example, new stores) so as to assess the valuation
of the assets in their current state and condition.
The key assumptions used in determining the recoverable amount are:
· Future trading performance including sales growth, product mix,
material and operating costs;
· Foreign exchange rates applicable to purchases of goods for
resale (for the stores CGU);
· The terminal growth rate applied; and
· The discount rate.
The values assigned to the variables that underpin the Group's expectations of
future trading performance were determined based on actual performance and the
Group's expectations with regard to future trends. Where applicable, amounts
take into account the Group's hedges and fixed contracts, changes in market
prices and rates, and relevant industry and consumer data to inform
expectations around future trends.
The Group assumes a long-term GBPUSD exchange rate in line with published
forward curves at the balance sheet date, adjusted to reflect the value of
forward contracts in place. The fair value of these contracts is included in
the carrying amount of the relevant CGU.
The values assigned to terminal growth rates and discount rates for each CGU
are shown in the table below:
CGU Terminal Growth Rate Discount Rate
FY26 FY25 FY26 FY25
Stores 0% 0% 10.5% 12.0%
Garven 0% 0% 11.5% 12.0%
Funky Pigeon 0% n/a 11.5% n/a
The Group applies a 0% terminal growth rate beyond the five-year term of the
plan for all CGUs, representing a sensitised view of the Group's estimate of
the long-term growth rate in the markets in which each CGU operates. Whilst
such long-term rates are inherently difficult to benchmark using independent
data, the Group's reverse stress-testing of the goodwill impairment model
indicated a significant negative terminal decline would be required in order
to eliminate the headroom completely.
The forecast cash flows are discounted using a pre-tax rate derived from the
weighted average cost of capital of the Group (determined using the capital
asset pricing model, actual debt costs and available market data), adjusted to
reflect the specific risks associated with each CGU, including the country
risk, currency risk and size risk.
In all cases, no impairment loss was identified and the recoverable amount
indicated sufficient headroom such that any reasonably possible change in the
key assumptions would not result in an impairment charge in respect of any
CGU.
During the year, the Group recognised an impairment charge of £3.2 million in
respect of the online platform for Card Factory Online. The charge to the Card
Factory Online assets reflects the post-acquisition plans regarding future use
of technology across the two platforms and this has resulted in the existing
Card Factory Online assets being considered obsolete. No further impairment
review has been performed on this CGU as the remaining assets have a trivial
net book value.
Impairment Testing: Intangible assets not yet available for use
Assets not yet ready for use relate to software assets under construction
within the cardfactory stores and Funky Pigeon CGUs that have both been
considered for impairment as above.
13 Property, plant and equipment
Freehold Leasehold improvements Plant, equipment, fixtures & vehicles Total
property
£'m £'m £'m
£'m
Cost
At 1 February 2025 22.7 40.8 106.5 170.0
Additions 1.4 - 10.3 11.7
Acquisitions (note 25) - - 1.2 1.2
Disposals - - (0.1) (0.1)
At 31 January 2026 24.1 40.8 117.9 182.8
Depreciation
At 1 February 2025 5.7 40.4 75.2 121.3
Depreciation in the period 0.5 0.1 9.1 9.7
Impairment - - 0.3 0.3
Depreciation on disposals - - (0.1) (0.1)
At 31 January 2026 6.2 40.5 84.6 131.2
Net book value
At 31 January 2026 17.9 0.3 33.4 51.6
At 31 January 2025 17.0 0.4 31.3 48.7
Freehold Leasehold improvements Plant, equipment, fixtures & vehicles Total
property
£'m £'m £'m
£'m
Cost
At 1 February 2024 22.6 40.8 95.7 159.1
Additions 0.1 - 11.3 11.5
Acquisition of Garven & Garlanna (note 25) - - 0.2 0.2
Disposals - - (0.7) (0.7)
At 31 January 2025 22.7 40.8 106.5 170.0
Depreciation
At 1 February 2024 5.3 40.0 67.9 113.2
Depreciation in the period 0.4 0.4 7.9 8.7
Depreciation on disposals - - (0.6) (0.6)
At 31 January 2025 5.7 40.4 75.2 121.3
Net book value
At 31 January 2025 17.0 0.4 31.3 48.7
At 31 January 2024 17.3 0.8 27.8 45.9
As at 31 January 2026, the Group held assets under construction of £0.5
million (FY25: £nil) within Plant, equipment, fixtures and vehicles. These
assets do not depreciate until brought into use. The impairment charge of
£0.3 million for Plant, equipment, fixtures and vehicles has arisen as part
of the cardfactory stores impairment testing as discussed in note 12.
14 Leases
The Group has lease contracts, within the definition of IFRS 16 leases, in
relation to its entire Store lease portfolio, some warehousing locations and
motor vehicles. Other contracts, including distribution contracts and IT
equipment, are deemed not to be a lease within the definition of IFRS 16 or
are subject to the election not to apply the requirements of IFRS 16 to
short-term or low value leases.
Right of use assets 2026 2025
£m £m
Buildings 113.5 109.4
Motor Vehicles 1.3 0.8
114.8 110.2
The right-of-use assets movement in the year is as follows:
2026 2025
£m £m
At the beginning of the year 110.2 99.2
Acquisition of Funky Pigeon 0.6 -
Acquisition of Garven - 0.1
Additions:
Buildings 41.1 47.5
Motor Vehicles 1.4 0.3
Disposals (0.4) (1.0)
Depreciation charge:
Buildings (36.4) (35.7)
Motor Vehicles (0.9) (0.6)
Net Impairment (Charge) / Reversal (1.1) 0.4
Effect of foreign exchange rates 0.3 -
At the end of the year 114.8 110.2
Disposals and depreciation/impairment on disposals includes fully depreciated
right-of-use assets where the lease term has expired, including amounts in
respect of leases that have expired but the asset remained in use whilst a new
lease was negotiated.
Profits on disposal arise where leases that have been exited before the end of
the lease term where the asset has been previously impaired. The Group's full
accounting policy in respect of leases and right-of-use assets is set out in
the final Annual Report.
Impairment Testing: Store assets
As described in note 12, the Group considers each individual store in the
estate to be a CGU for impairment testing purposes. The Group assesses
indicators of impairment for the store portfolio on the basis of whether an
impairment charge (or reversal) could arise in respect of an individual store,
being the smallest group of assets to which separable cashflows can be
allocated. As a result of carried forward impairment charges, indicators of
impairment linked to economic performance and any stores planned to close, the
Group identified a number of stores with an indicator of potential impairment
for FY26.
The recoverable amount of each store was determined based on the expected
future cash flows applicable to that store, assessed using a basis consistent
with the future cash flows used in the goodwill impairment test described in
note 12, but limited to the term of the current lease as assessed under IFRS
16. As a result, the key assumptions are also considered to be consistent with
those described in note 12, in addition to the allocation of central and
shared costs to individual stores insofar as such an allocation can be made on
a reasonable and consistent basis. Shared costs applicable to the store estate
are allocated to individual stores on the basis of pro-rata revenue.
The significant assumptions in the store impairment model are consistent with
those described in note 12, with the addition of the allocation of central and
shared overheads. The vertically integrated and omnichannel nature of the
Group with a single, central support function means the allocation of shared
overheads between divisions, CGUs and, for the purpose of store-level
impairment testing, to individual stores inherently involves judgement.
Central costs are reviewed on a line by line basis to identify amounts which
are necessarily incurred to generate the CGU cash flows, which includes
identification of certain costs that cannot be reasonably and accurately
allocated to individual stores and are only necessarily incurred to generate
the cashflows of the CGU comprising the whole Group of Stores.
Application of this approach and assumptions resulted in a net impairment
charge of £1.4 million in respect of stores, which is comprised of £1.4
million of impairment reversals and £2.8 million of impairment charges. The
reversals reflect those stores where an impairment charge made in a prior
period has been reversed due to improved trading and outlook. The net
impairment charge in the current year included a net charge to impairment on
Right of use assets of £1.1 million and a net charge to PPE of £0.3 million.
The Group considered a range of feasible alternative allocations of central
overhead based on different scenarios and differing judgements regarding the
allocation of specific cost items. This analysis indicated a potential range
of impairment charges between £0.6 million and £2.7 million. The Group
believes that the position adopted in the financial statements represents a
balanced view of central overheads that are necessarily incurred and can be
allocated to individual stores on a reasonable and consistent basis.
Having considered scenarios consistent with those reviewed in the goodwill
impairment tests, the Group is satisfied that there are no other reasonable
changes in key assumptions that would result in a material change in the
impairment charge recorded for stores.
Lease liabilities 2026 2025
£m £m
Current lease liabilities (32.8) (21.7)
Non-current lease liabilities (90.4) (88.7)
Total lease liabilities (123.2) (110.4)
Lease expense 2026 2025
£m £m
Depreciation expense on right of use assets 37.3 36.3
Impairment / (Reversal of Impairment) of right of use assets 1.1 (0.4)
Profit on disposal of right of use assets (0.7) -
Lease interest 8.7 8.0
Expense relating to variable lease payments1 0.4 0.2
Total lease related income statement expense 46.8 44.1
1 A small proportion of the store lease portfolio are subject to an
element of turnover linked variable rents that are excluded from the
definition of a lease under IFRS 16.
Accounting policies for leases are detailed in the final Annual Report.
Assets, liabilities and the income statement expense in relation to leases are
detailed below.
Disposals and depreciation/impairment on disposals includes fully depreciated
right-of-use assets where the lease term has expired, including amounts in
respect of leases that have expired but the asset remained in use whilst a new
lease was negotiated. Profits on disposal arise where leases that have been
exited before the end of the lease term where the asset has been previously
impaired. The Group's full accounting policy in respect of leases and
right-of-use assets is set out in the final Annual Report.
15 Deferred tax assets and liabilities
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amount of an asset or liability in the financial
statements and the corresponding tax bases used in the computation of taxable
profit/loss.
Movement in deferred tax during the year:
Fixed Share-based payments Derivative financial instruments and hedge accounting Tax losses Other temporary differences Total
assets
£'m £'m £'m £'m £'m
£'m
At 31 January 2024 (1.7) 1.2 0.2 - 1.5 1.2
Prior year adjustment (0.6) - - - (1.1) (1.7)
Credit/(charge) to income statement (0.5) 0.3 - 0.6 (0.2) 0.2
Credit/(charge) to other comprehensive income - - (0.4) - - (0.4)
Charge to equity - (0.1) - - - 0.1
At 31 January 2025 (2.8) 1.4 (0.2) 0.6 0.2 (0.8)
Acquisition of subsidiary (0.7) - - - (4.9) (5.6)
Prior year adjustment (4.0) - - - 0.1 (3.9)
Credit/(charge) to income statement (0.2) 0.2 - 0.3 (0.1) 0.2
Credit/(charge) to other comprehensive income - - 1.7 - - 1.7
Charge to equity - (0.1) (0.5) - - (0.7)
At 31 January 2026 (7.7) 1.5 1.0 0.9 (4.7) (9.0)
Deferred tax assets and liabilities are offset to the extent they are levied
by the same tax authority and the Group has a legally enforceable right to do
so, otherwise they are shown separately in the balance sheet. The Deferred tax
asset for tax losses of £0.9 million has been recognised separately as it
relates to losses under different tax authorities.
Deferred tax assets and liabilities are offset as follows:
2026 2025
£'m £'m
Deferred tax assets 3.4 1.6
Deferred tax liabilities (12.4) (3.0)
Net deferred tax liability (9.0) (1.4)
The Group measures deferred tax assets and liabilities at the current rate of
UK corporation tax, 25% or the relevant local tax authority rate where there
is no right to offset.
16 Inventories
2026 2025
£'m £'m
Finished goods 58.5 60.5
Work in progress 0.4 0.6
58.9 61.1
Inventories are stated net of provisions totalling £10.6 million (2025: £8.2
million). The cost of inventories recognised as an expense and charged to cost
of sales in the year, net of movements in provisions, was £186.0 million
(2025: £162.8 million).
17 Cash and cash equivalents
2026 2025
£'m £'m
Cash at bank and in hand 18.8 16.5
Cash presented as current assets in the balance sheet 18.8 16.5
Bank overdraft (1.4) -
Overdraft presented as current liabilities in the balance sheet (1.4) -
Net cash and cash equivalents 17.4 16.5
The Group manages its liquidity requirements on a Group-wide basis and
regularly sweeps and pools cash in order to optimise returns and / or ensure
the most efficient deployment of borrowing facilities in order to minimise
fees, whilst maintaining sufficient short-term liquidity to meet its
liabilities as they fall due.
Cash in bank accounts and overdrafts are presented net where the Group has a
legal right to offset amounts - such as those with the same banking provider
or included in netting arrangements under its financing facilities.
The Group's cash and cash equivalents are denominated in the following
currencies:
2026 2025
£'m £'m
Sterling 10.2 8.5
Euro 4.4 2.5
US Dollar 3.7 5.0
Australian Dollar 0.4 -
South African Rand (1.3) 0.5
17.4 16.5
18 Borrowings
2026 2025
£'m £'m
Current liabilities
Bank loans and accrued interest 0.1 0.1
Bank overdraft 1.4 -
Total current liabilities 1.5 0.1
Non-current liabilities
Bank loans 83.8 73.9
Total Non-current liabilities 83.8 73.9
Bank loans
Bank borrowings as at 31 January 2026 are summarised as follows:
Liability Interest rate Interest margin
ratchet range
£'m %
%
31 January 2026
Secured revolving credit facility 85.0 Margin + SONIA 1.90 - 2.80 Total facility size = £160 million
Property mortgage 0.3
Bank overdraft 1.4
Debt issue costs (1.4)
85.3
31 January 2025
Secured revolving credit facility 75.0 Margin + SONIA 1.90 - 2.80 Total facility size = £125 million
Property mortgage 0.4
Debt issue costs (1.4)
74.0
The Group's financing facilities are principally comprised of a revolving
credit facility (RCF) originally entered into in April 2024. In August 2025,
the Group exercised a £35 million Accordion option with lender approval, to
extend the total size of the RCF to £160 million.
The facilities had an initial maturity date in April 2028, which was extended
to November 2028 during FY26.
The facilities include £40 million of remaining accordion and a further
extension option to November 2029, both of which can be executed subject to
certain administrative conditions and lender approval.
The margin on the facilities is dependent upon the Group's leverage position,
with margins between 1.9-2.8%. The facilities include covenants for a maximum
leverage ratio (calculated as net debt excluding leases divided by EBITDA less
rent costs for the prior 12 months) of 2.5x and a fixed charge cover ratio of
at least 1.75x. The Group expects to operate comfortably within these covenant
levels for the foreseeable future.
Other facilities include a property mortgage in the Group's South African
business, which has been fully settled and extinguished since the period end
plus local overdraft facilities which are used for day-to-day liquidity
management purposes.
Outstanding debt issue costs in respect of the April 2024 refinancing totalled
£1.4 million and are being amortised to the income statement over the
remaining duration of the revised facilities including £0.2 million of
extension fees incurred in FY26.
19 Share capital and share premium
2026 2025
(Number) (Number)
Share capital
Allotted, called up and fully paid ordinary shares of one pence:
At the start of the period 348,004,716 345,576,361
Issued in the period 3,591,206 2,428,355
At the end of the period 351,595,922 348,004,716
£'m £'m
Share capital
At the start of the period 3.5 3.5
Issued in the period - -
At the end of the period 3.5 3.5
£'m £'m
Share premium
At the start of the period 203.2 202.7
Issued in the period 0.6 0.5
At the end of the period 203.8 203.2
Shares issued in the period relate entirely to those issued upon vesting of
employee share schemes.
Treasury Shares 2026 2026 2025 2025
(Number) (£'m) (Number) (£'m)
Ordinary shares of one pence:
At the start of the period - - - -
Purchase of shares into treasury 5,795,564 5.0 - -
Transfer of shares to retained earnings (28,730) -
At the end of the period 5,766,834 5.0 - -
On 30 October 2025, the Group announced the commencement of a share repurchase
programme, the purpose of which was to acquire shares to satisfy future awards
under the Group's employee share schemes.
On 28 April 2026, the Group announced the intention to return surplus cash to
shareholders via a £15 million share buyback programme. Shares purchased
under the programme are to be cancelled.
Share Capital in Issue 2026 2025
(Number) (Number)
Total allotted, called up and fully paid ordinary shares as at 31 January 2026 351,595,922 348,004,716
Less: Shares held in treasury reserve (5,766,834) -
Total shares in issue 345,829,088 348,004,716
20 Notes to the cash flow statement
Reconciliation of operating profit to cash generated from operations:
2026 2025
£'m £'m
Profit before tax 43.9 64.1
Net finance expense 15.5 15.2
Operating profit 59.4 79.3
Adjusted for:
Depreciation and amortisation 53.6 48.5
Impairment charge / (reversal) of right-of-use assets 1.1 (0.4)
Impairment of tangible assets 0.3 -
Impairment of intangible assets 3.2 -
Gain on disposal of fixed assets (0.7) -
Cash flow hedging foreign currency movements 4.7 (1.9)
Unrealised foreign exchange (gains) / losses (1.3) (0.1)
Share-based payments charge 2.3 2.3
Operating cash flows before changes in working capital 122.6 127.7
Decrease/(increase) in receivables (2.7) (3.3)
Decrease/(increase) in inventories (1.4) (11.2)
(Decrease)/increase in payables 5.9 (4.1)
Movement in provisions (2.1) (3.5)
Cash inflow from operating activities 122.3 105.6
21 Analysis of net debt
At 1 February Cash flow Non-cash At 31 January
2025
changes
2026
£'m
£'m £'m £'m
Secured bank loans and accrued interest (note 18) (74.0) (3.3) (6.6) (83.9)
Lease liabilities (110.4) 45.7 (58.5) (123.2)
Total debt (184.4) 42.4 (65.1) (207.1)
Add: debt costs capitalised (1.4) (0.2) 0.2 (1.4)
Add: bank overdraft - (1.4) - (1.4)
Less: cash and cash equivalents excluding bank overdraft (note 17) 16.5 2.3 - 18.8
Net debt (169.3) 43.1 (64.9) (191.1)
Lease liabilities 110.4 (45.7) 58.5 123.2
Net debt excluding lease liabilities (58.9) (2.6) (6.4) (67.9)
At 1 February Cash flow Non-cash At 31 January
2024
changes
2025
£'m
£'m £'m £'m
Secured bank loans and accrued interest (note 18) (44.8) (23.6) (5.6) (74.0)
Lease liabilities (100.8) 45.6 (55.2) (110.4)
Total debt (145.6) 22.0 (60.8) (184.4)
Add: debt costs capitalised (0.7) (1.6) 0.9 (1.4)
Add: bank overdraft (0.2) 0.2 - -
Less: cash and cash equivalents excluding bank overdraft (note 17) 11.3 5.2 - 16.5
Net debt (135.2) 25.8 (59.9) (169.3)
Lease liabilities 100.8 (45.6) 55.2 110.4
Net debt excluding lease liabilities (34.4) (19.8) (4.7) (58.9)
Non-cash changes in respect of lease liabilities reflect changes in the
carrying amount of leases arising from additions, disposals and modifications.
22 Provisions
Covid-19-related support Property provisions Restructuring provision Total
£'m £'m £'m £'m
At 1 February 2024 5.4 2.1 - 7.5
Acquisitions - 0.6 - 0.6
Provisions utilised during the year (3.3) (0.3) - (3.6)
Provisions released during the year - (0.8) - (0.8)
Amounts provided during the year - 0.5 1.2 1.7
At 31 January 2025 2.1 2.1 1.2 5.4
Acquisitions (note 25) - 2.5 - 2.5
Provisions utilised during the year - (0.4) (1.2) (1.6)
Provisions released during the year - (0.8) - (0.8)
Amounts provided during the year - 0.3 - 0.3
At 31 January 2026 2.1 3.7 - 5.8
Current provisions as at 31 January 2026 2.1 1.2 - 3.3
Non-current provisions as at 31 January 2026 - 2.5 - 2.5
Total provisions as at 31 January 2026 2.1 3.7 - 5.8
Covid-19-related support provisions reflect amounts received under one-off
schemes designed to provide support to businesses affected by Covid-19
restrictions, including lockdown grants and CJRS, in excess of the value the
Group reasonably believes it is entitled to retain under the terms and
conditions of those schemes. The provisions have been estimated based on the
Group's interpretation of the terms and conditions of the respective schemes
and, where applicable, independent professional advice.
A partial settlement of these amounts was paid in April 2024 amounting to
£3.3 million, leaving £2.1 million outstanding. The Group continues to hold
discussions regarding settlement of the remaining element of the provision.
The Group has not obtained any information that changes its assessment of the
valuation of the remaining provision at 31 January 2026. The Group believes a
range of reasonably possible outcomes remains and that the Group's provision
reflects a reasonable assessment of the amount that may be repayable. The
Group does not believe that any position within the range of reasonably
possible outcomes would reflect a material change to the provision held at the
balance sheet date and this provision is classified as current as the Group is
actively aiming to resolve this settlement in the next 12 months.
The costs incurred as a result of the restructuring programme associated with
the closure of the Getting Personal website in FY25 were wholly utilised in
FY26.
The Group maintains provisions in respect of its store portfolio to cover the
estimated cost of restoring properties to their original condition upon exit
of the property. Despite the size of the Group's store portfolio, such
provisions are generally small which is consistent with the Group's experience
of actual dilapidations and restoration costs.
Specific provisions are usually made where the Group has a reasonable
expectation that the related property may be exited, or is at a higher risk of
exiting, in the near future and are generally expected to be utilised in the
short-term. Any non-current portion of the provision is considered immaterial.
We have recognised a £2.5 million provision for dilapidations related to the
Guernsey property acquired in the acquisition of Funky Pigeon in FY26, see
note 25 for further details.
23 Capital commitments
The Group had £2.1 million of capital commitments relating to the purchase of
a printing machine at 31 January 2026 (2025: £nil).
24 Related party transactions
A full listing of the Group's subsidiary undertakings is provided in the notes
to the Company accounts in the final Annual report.
Transactions with key management personnel
The key management personnel of the Group comprise the Card Factory plc Board
of Directors and the Executive Board. Disclosures relating to remuneration of
key management personnel are included in note 5 of the financial statements.
Further details of Directors' remuneration are set out in the Directors'
Remuneration Report in the final Annual Report. Directors of the Company and
their immediate families control 0.4% of the ordinary shares of the Company.
There were no other related party transactions in the year.
25 Business Combinations
Business combinations are accounted for using the acquisition method. The
identifiable assets acquired and liabilities assumed are recognised at their
fair values at the acquisition date.
Acquisition of Funky Pigeon
On 14 August 2025, the Group acquired 100% of the issued share capital of
Funkypigeon.com Limited ("Funky Pigeon") from WHSmith plc for cash
consideration which, following finalisation of customary adjustments for
closing cash, debt and working capital, totalled £25.7 million.
Acquisition-related costs totalling £1.7 million have been expensed and
included within operating expenses in the Consolidated Income Statement. These
costs have been excluded from adjusted PBT as they are non-recurring in nature
as seen in the explanatory notes at the end of this document.
The purchase price allocation for the acquisition of Funky Pigeon was prepared
in accordance with IFRS 3 with the fair values of the assets and liabilities
acquired set in the table below.
As at
Fair value of identifiable net assets 14 August
2025
£'m
Non-current assets 9.0
Property, plant & equipment 1.2
Intangible assets 7.2
Right-of-use assets 0.6
Current assets 2.4
Inventories 1.1
Trade & other receivables 1.3
Cash at bank and in hand -
Total assets 11.4
Current liabilities (7.9)
Trade & other payables (4.0)
Deferred income (0.1)
Deferred tax (0.7)
Lease liabilities (0.6)
Provisions (2.5)
Total liabilities (2.7)
Net assets of acquired subsidiary 3.5
Add: intangible assets (note 12) 19.7
Less: deferred tax on intangible assets (4.9)
Add: Goodwill (note 12) 7.4
Total consideration paid 25.7
Less cash acquired: -
Net cash outflow 25.7
The acquired business operates funkypigeon.com, an established online
personalised card and attached gifting business, which is supported by its
standalone team in Bristol and Guernsey. Over the prior two financial years,
Funky Pigeon on average generated c.£32 million revenue per annum and c.£5
million EBITDA.
The acquisition of Funky Pigeon accelerates cardfactory's existing digital
strategy, providing a platform for online growth, particularly in the
direct-to-recipient card and attached gifting market. By combining Funky
Pigeon's digital platform with our existing omnichannel offer, cardfactory
intends to leverage its 24 million unique store customers to develop a highly
competitive online presence in the celebration occasions market. Our vision
for online is to expand our digital presence by becoming an online destination
to help our customers celebrate all of life's moments.
The total cash consideration for the transaction was £25.7 million on a
cash/debt free basis, of which £24.1 million was paid on the acquisition date
and the remaining amount settled on finalisation of the completion accounts in
October 2026. There is no further contingent or deferred consideration
payable.
The Group have made fair value adjustments to the assets and liabilities in
the acquiree's local financial records in arriving at the provisional fair
values as required by IFRS 3 which are detailed below:
- The Group measured the acquired lease liabilities using the
present value of the remaining lease payments at the date of acquisition. The
right-of-use assets were measured at an amount equal to the lease liabilities.
- Recognising a provision (£2.5 million) in relation to costs
expected to be incurred to return leased property to its original state as
disclosed in note 22.
The fair value of the net assets acquired is £3.5 million. The Group has
recognised £11.5 million of identifiable customer-related intangibles assets
and £8.2 million of brand-related intangible assets, see note 12 for further
details. This also led to the recognition of a deferred tax liability of £4.9
million which is a timing difference that will unwind over the life of the
intangible assets. This gives a total fair value of acquired assets of £18.3
million, which is lower than the fair value of the consideration paid
(Including cash acquired) of £25.7 million, the balance has resulted in
recognition of £7.4 million of Goodwill which is not tax-deductible. We
consider that Goodwill is appropriately recognised as we expect to achieve
synergies with our existing Online business in integrating the operations of
Funky Pigeon with the Group as part of our digital strategy.
Funky Pigeon contributed revenue of £13.5 million and a loss of £0.4 million
to the Group's profit after tax for the period between the date of acquisition
and the reporting date.
If the acquisition of Funky Pigeon had been completed on the first day of the
financial year, Group revenues for the year to 31 January 2026 would have been
£597.9 million and Group profit after tax would have been £34.1 million.
Explanatory Notes
Alternative Performance Measures ("APMS") and other explanatory information
In the reporting of the consolidated financial statements, the Directors have
adopted various Alternative Performance Measures ('APMs') of financial
performance, position or cash flows other than those defined or specified
under International Accounting Standards ('IFRS').
These measures are not defined by IFRS and therefore may not be directly
comparable with other companies' APMs, including those in the Group's industry
or that appear to have similar titles or labels. APMs should be considered in
addition to IFRS measures and are not intended to be a substitute for IFRS
measurements.
The Directors believe that these APMs provide additional useful information on
the performance and position of the Group and are intended to aid the user in
understanding the Group's results.
The APMs presented are consistent with measures used internally by the Board
and management for performance analysis, planning, reporting and incentive
setting purposes.
The table below sets out the APMs used in this report, with further
information regarding the APM, and a reconciliation to the closest IFRS
equivalent measure, below.
Sales APMs Like-for-like sales (LFL)
Profitability APMs EBITDA
Adjusted Profit Before Tax (PBT)
Adjusted EPS
Financial position APMs Net Debt
Leverage and Adjusted Leverage
Cash flow APMs Operating Cash Conversion
Free cash flow
Sales APMs
LFL Sales
Closest IFRS Equivalent: Revenue.
Like-for-like or LFL calculates the growth or decline in gross sales in the
current period versus a prior comparative period.
For stores, LFL measures exclude any sales earned from new stores opened in
the current period or closed since the comparative period and only con-sider
the time period where stores were open and trading in both the current and
prior period.
LFL measures for product lines or categories, where quoted, are calculated
using the same principles.
LFL measures for our online businesses (cardfactory.co.uk and
gettingpersonal.co.uk) compare gross sales for the current and comparative
period made through the respective online platform.
All LFL measures in this report compare FY26 to FY25, unless otherwise stated.
In addition, the Group reports combined Like-for-Iike sales measures for
certain components of the business as follows:
· 'cardfactory LFL' is defined as Like-for-like sales in stores plus
Like-for-like sales from the cardfactory website www.cardfactory.co.uk.
Sales by Printcraft, the Group's printing division, to external third-party
customers and partnerships sales are excluded from any LFL sales measure.
Reconciliation of Revenue to LFL Sales cardfactory cardfactory cardfactory
Stores Online LFL
£m £m £m
Revenue FY26 514.0 7.2 521.2
VAT / other 99.6 1.4 100.9
Adjustment for Stores not open in both periods (12.0) - (12.0)
LFL Sales FY26 601.6 8.6 610.1
Revenue FY25 506.8 8.8 515.6
VAT / other 99.1 1.9 101.0
Adjustment for Stores not open in both periods (3.1) - (3.1)
LFL Sales FY25 602.8 10.7 613.5
LFL Sales Growth -0.2% -19.9% -0.5%
Note percentages are calculated based on absolute figures before rounding.
Profitability APMs
EBITDA
Closest IFRS Equivalent: Operating Profit(1)
EBITDA is earnings before interest, tax, gains or losses on disposal,
depreciation, amortisation and impairment charges. Earnings is equivalent to
profit after tax calculated in accordance with IFRS and each adjusting item is
calculated in accordance with the relevant IFRS.
The Group uses EBITDA as a measure of trading performance, as it usually
closely correlates to the Group's operating cash generation.
Reconciliation of EBITDA to Operating Profit FY26 FY25
£m £m
Operating Profit(1) 59.4 79.3
Add back:
Depreciation 47.0 45.2
Amortisation 6.5 3.3
(Gains) / Losses on disposals (0.7) 0.1
Impairment charges / (reversals) 4.6 (0.4)
EBITDA 116.8 127.5
Add back / (deduct) unrealised losses / (gains) on derivative contracts 4.7 (1.5)
Add back one-off restructuring costs 0.4 1.9
Add back acquisition related transaction costs 1.7 0.7
Adjusted EBITDA 123.6 128.6
(1) Whilst operating profit is not defined formally in IFRS, it is considered
a generally accepted accounting measure.
Adjusted PBT
Closest IFRS Equivalent: Profit Before Tax.
Adjusted PBT is Profit Before Tax adjusted to exclude the effect of
transactions that, in the opinion of the Directors, are either one-off in
nature and/or are unreflective of the underlying trading performance of the
Group in the period. Adjusted PBT reports a normalised or underlying trading
performance of the Group.
The transactions that have been adjusted could distort the impression of
future performance trends based on the current year results. The Group uses
Adjusted PBT to assess its performance on an underlying basis excluding these
items and believe measures adjusted in this manner provide additional
information about the impact of unusual or one-off items on the Group's
performance in the period.
In FY26 the Directors have identified the following items that they believe to
meet the definition of 'one-off/non-underlying' for this purpose:
· Transaction costs related to the acquisition of Funky Pigeon of £1.7
million.
· Amortisation charged relating to intangible assets recognised as a
result of the acquisitions in FY25 and FY26 of £2.1 million.
· One-off restructuring costs of £0.4 million associated with the
closure of the Getting Personal platform and streamlining central operations,
the Ezhakeni site closure in South Africa and the Property acquisition at
Garlanna in Ireland.
· Unrealised losses of £4.7 million on derivative contracts held at 31
January 2026.
· Impairment of the CF Online intangible assets due to our considerations
of use of technology in our Digital strategy following the acquisition of
Funky Pigeon.
The following items are taken into account in arriving at Adjusted PBT for the
equivalent period last year (FY25):
· Non-recurring finance charges related to refinancing completed in April
2024 of £0.5 million.
· Transaction costs related to the acquisitions of Garven and Garlanna of
£0.7 million.
· Amortisation charged relating to intangible assets recognised as a
result of the acquisitions of Garven and Garlanna of £0.3 million.
· One-off restructuring costs of £1.9 million associated with the
closure of the Getting Personal platform and streamlining central support
operations.
· Unrealised gains of £1.5 million on derivative contracts held at 31
January 2025.
Reconciliation of Adjusted PBT to Profit Before Tax FY26 FY25
£m £m
Profit Before Tax 43.9 64.1
Add back/(deduct):
Unrealised losses / (gains) on derivative contracts 4.7 (1.5)
CF Online Intangible impairment 3.2 -
Amortisation of acquired intangibles 2.1 0.3
Acquisition-related transaction costs 1.7 0.7
One-off restructuring costs 0.4 1.9
Non-recurring refinancing charges - 0.5
Adjusted PBT 56.0 66.0
The following table reconciles the impact of adjusting items as above on
Adjusted Gross Profit, adjusted operating profit and Adjusted Profit Before
Tax.
Reconciliation of adjusting items on the income statement (FY25) FY26 FY25
£m £m
Gross profit 188.7 193.8
(Deduct) / Add back one-off restructuring / transformation costs (0.2) 0.6
Add back / (deduct) unrealised losses / (gains) on derivative contracts 4.7 (1.5)
Adjusted Gross Profit 193.2 192.9
Operating expenses (129.3) (114.5)
Add back acquisition-related transaction costs 1.7 0.7
Add back one-off restructuring costs 0.6 1.3
Add back amortisation of acquired intangibles 2.1 0.3
Add back CF Online Intangible impairment 3.2 -
Adjusted operating profit 71.5 80.7
Finance costs (15.5) (15.2)
Adjusted Profit Before Tax 56.0 66.0
Adjusted EPS
Closest IFRS Equivalent: Basic EPS.
Adjusted EPS is earnings per share adjusted to exclude the post-tax effect of
items identified as one-off and excluded from Adjusted PBT in the period. The
Group calculates adjusted EPS as it is the basis of dividend calculations
under its capital allocation policy, under which the Board targets a dividend
cover ratio of between 2-3x Adjusted EPS. The starting point of the
calculation is Adjusted PBT, as calculated above.
Calculation of Adjusted EPS FY26 FY25
£m £m
Adjusted PBT 56.0 66.0
Tax charge (12.7) (16.3)
Tax impact of non-underlying items (2.2) (0.2)
Adjusted PAT 41.1 49.5
Weighted average number of shares 348,196,571 346,910,019
Weighted average number of dilutive share options 771,642 2,295,420
Weighted average number of shares for diluted Earnings per Share 348,968,213 349,205,439
Adjusted EPS 11.8p 14.3p
Adjusted Diluted EPS 11.8p 14.2p
Financial position APMs
Net Debt
Closest IFRS Equivalent: No equivalent; however is calculated by combining
IFRS measures for Cash and Borrowings.
Net Debt is calculated by subtracting the Group's cash and cash equivalents
from its gross borrowings (before debt-issue costs). Net Debt is a key measure
of the Group's balance sheet strength, and is also a covenant in the Group's
financing facilities. The Group presents Net Debt both inclusive and
exclusive of lease liabilities, but focusses upon the value exclusive of lease
liabilities, which is consistent with the calculation used for covenant
purposes.
Calculation of Net Debt FY26 FY25
£m £m
Current Borrowings (including overdraft) 1.5 -
Non-Current Borrowings 83.8 74.0
Add back Debt Issue Costs 1.4 1.4
Gross Borrowings 86.7 75.4
Less cash (18.8) (16.5)
Net Debt (exc. Leases) 67.9 58.9
Add back Lease Liabilities 123.2 110.4
Net Debt (inc. Leases) 191.1 169.3
Leverage & Adjusted Leverage
Closest IFRS Equivalent: No equivalent; however is calculated with reference
to Net Debt and EBITDA, which are reconciled to relevant IFRS measures in this
section.
Leverage is the ratio of Net Debt (excluding lease liabilities) to EBITDA for
the previous 12 months expressed as a multiple. Adjusted Leverage is
calculated in the same way, but deducts lease-related charges from EBITDA. The
Group monitors and reports leverage as a key measure of its financing position
and as an assessment of the Group's ability to manage and repay its debt
position. Adjusted Leverage is consistent with a covenant defined with-in the
Group's financing facilities.
Under its capital allocation policy, the Group targets Adjusted Leverage below
1.5x throughout the financial year. The Group have remained within the maximum
adjusted leverage target in the year to 31 January 2026. As described in the
financial review above, the Group's cash flows and earnings are materially
affected by seasonality, with higher sales and cash flows in the second half
of the year linked to the Christmas season. As a result, net debt levels are
lower and Leverage improved at the year end, after the Christmas season.
Calculation of Leverage FY26 FY25
£m £m
Net debt (as calculated above) (A) 67.9 58.9
EBITDA (as calculated above) (B) 116.8 127.5
IFRS 16 depreciation (37.3) (36.3)
IFRS 16 impairment (charge) / reversal (1.1) 0.4
Gains / (losses) on modification/disposal 0.7 (0.1)
IFRS 16 interest (8.7) (8.0)
EBITDA less rent costs (C) 70.4 83.5
Leverage (A/B) 0.6x 0.5x
Adjusted Leverage (A/C) 1.0x 0.7x
Cash flow APMs
Free Cash Flow
Closest IFRS Equivalent: No equivalent; however it is calculated with
reference to net cash inflow from operating activities (an IFRS measure).
Free cash flow is net cash inflow from operating activities per the cash flow
statement prepared in accordance with IFRS less capital expenditure, lease
payments (including interest) and net finance costs.
Adjusted Free Cash Flow excludes the impact of cashflows that are considered
one-off in nature. In FY25, this includes £6.1 million of working capital
outflow which is deemed one-off due to timing of payments, total fees of £1.6
million related to the refinancing completed in April 2024 and £3.3 million
related to repayment of COVID Grant funds. No adjustments for cashflows that
are one-off nature have occurred in FY26.
Calculation of Free Cash Flow FY26 FY25
£m £m
Net cash inflow from operating activities (excluding transaction costs) 112.0 88.9
Less:
Capital Expenditure (19.4) (18.4)
Lease Payments (inc. Interest) (45.7) (45.6)
Net Finance Costs (6.2) (7.8)
Non-operating income - 0.7
Free Cash Flow 40.7 17.8
Adjusted Free Cash Flow 40.7 28.8
Free cash conversion
Closest IFRS Equivalent: No equivalent; however it is calculated with
reference to Free cash flow which is reconciled to Net cash inflow from
operating activities in this section and Adjusted Profit after Tax, which is
reconciled to profit after tax in this section.
Free cash conversion is adjusted Free Cash Flow as defined above divided by
adjusted profit after tax as defined in this section and expressed as a
percentage.
Calculation of Free Cash Conversion FY26 FY25
£m £m
Adjusted Free Cash Flow 40.7 28.8
Adjusted profit after tax 41.1 49.5
Free Cash conversion 98.9% 58.2%
Other financial calculation information
Unless otherwise stated, amounts in this report are presented in Pound
Sterling (GBP), and have been rounded to the nearest £0.1 million.
Information in tables or charts may not add down or across, or calculate
precisely, due to rounding.
Percentage movements, where provided, are based on amounts before they were
rounded to the nearest £0.1 million.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END PREXDLLLQZLBBBE
Copyright 2019 Regulatory News Service, all rights reservedRecent news on Card Factory
See all newsREG - Card Factory PLC - Commencement of share repurchase programme
AnnouncementREG - Card Factory PLC - Preliminary Results
AnnouncementREG - Card Factory PLC - Notice of Results
AnnouncementREG - Card Factory PLC - Total Voting Rights
AnnouncementREG - Card Factory PLC - Holding(s) in Company
Announcement