Card Factory to raise £90m in stock market listing

Card Factory is looking to raise gross proceeds of £90m through issuing new shares and Charterhouse, the company’s private equity owner, selling down its stake. The balance between the issue of new shares and the sale of existing holdings will be determined during an investor roadshow, but roughly 25pc of Card Factory will be floated on the stock market.

However, rather than using the proceeds to invest in growth, Card Factory plans to use the IPO to pay down debt.

Mr Hayes said that Card Factory will reduce borrowings by £90m to £160m.

He insisted that Card Factory, which has 700 stores, has room to grow in the UK and that the sale of shares by Charterhouse is not a sign that the company is running out of steam.

“Charterhouse will remain a significant investor post the IPO. So, I would dispute that,” Mr Hayes said.

Card Factory was founded in 1997 as a discount greeting card retailer and has grown like-for-like sales every year since. In the year to January 31, like-for-like sales grew by 3.1pc, helping revenues increase 9pc to £327m and underlying earnings before interest, tax, depreciation and amortisation 9.2pc to £80.4m.

Card Factory sold 285m cards last year and Mr Hayes claimed that the sector is growing robustly despite the demise of Clinton Cards and the growth of online shopping.

He added: “If you go back two years, the press headlines around the demise of Clintons were focused on two things, the growth of online and the overall decline in the sector. Both of which are factually incorrect. Online accounts for just 3pc of volumes [in the card market].”

Card Factory’s vertical integration has been heralded by the company as a unique strength. It means that the company is able to sell cards for as low as 29pc.

“It is a key point of differentiation from the competition,” Mr Hayes said. “If you are in control of your supply chain it allows you to have more control of the product you retail in your stores. We have improved the retail proposition in stores significantly.”

Card Factory has been opening 50 stores a year and plans to continue that following the IPO. Mr Hayes says the company wants to expand to 1,200 shops and has conducted due diligence on potential locations.

The company’s board has been bolstered ahead of the IPO by the arrival of Geoff Cooper, the Dunelm chairman and former Travis Perkins boss, as chairman.

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