// Card Factory has an extra month to negotiate with lenders to avoid breaching bank covenants on £ 200million loan
// He had previously warned he was about to break loan rules
Card Factory has been given an extra month to negotiate with lenders to avoid breaching bank covenants on a £ 200million loan.
Bosses had warned the retailer would break loan rules by the end of the month following a drop in sales during the Covid-19 pandemic.
However, Card Factory said this morning that its lenders will grant a waiver on the expected breach until February 28, while talks continue.
“We remain in constructive discussions with our banks and have agreed on a process to continue to explore a range of potential solutions, with the possibility of further expanding the waivers as this process continues,” a- he said in a statement.
Earlier this month, the greeting card retailer revealed that sales fell 38.1% after its stores were forced to close completely for 37% of potential trading days due to lockdowns.
Its online channels recorded “strong performance” in the 11 months to the end of 2020, with cardfactory.com seeing 137% like-for-like sales growth, while commercial sales increased 63% .
The retailer said at the time that it planned to report a pre-tax loss of around £ 10million for the year, compared to a profit of over £ 65million the year before.
Card Factory’s announcement came less than 24 hours after rival card vendor Paperchase struck a bailout deal that will save around 1,000 jobs and most stores after falling in administration.
However, it is understood that at least 27 of its 127 stores would close their doors for good and that up to 250 jobs would be laid off.
Directors have revealed that the new company Aspen Phoenix Newco, backed by Permira Debt Managers, will take control of the retailer.
Meanwhile, online competitor Moonpig is gearing up for a stock market listing later this year in a move that is expected to value him at over £ 1 billion after seeing a 135% increase in sales in the past six months until October as the pandemic brought more customers online.
with PA wires