Earnings Call: H1 2022

Sep 28, 2021

Welcome to our Interim Results Update for FY 'twenty 2. I'm Darcy, CEO of Card Factory, and joining me today is Chris Lee, our Chief Financial Officer. Chris and I will shortly provide the financial performance update for the half one of FY 2022. Then as we stated in our prelims, we will provide an update on date on our future growth strategy, which has been the subject to review over the last few months since I joined the business. Looking first at the financial performance for the first half of FY 2022, we are pleased with how the business has performed. With sales of 116,900,000, Card factories achieved a like for like revenues of minus 3.7 percent that split by stores at minus 72% and online at plus 50.2%. This has led to a €6,500,000 loss before tax. We've continued our strong focus on cash and our net debt is now below €100,000,000 Store transaction levels continue to outperform the SpringBoard High Street footfall data, demonstrating the strength of the brand and the customer proposition. And in addition, increased average basket value across multiple categories is offsetting the reduction in transaction volumes. So what's important to note, unlike other retailers, If you missed a birthday party because of lockdown, that event will not be repeated. However, if for example, we look at the wedding category, What we are seeing is that as restrictions have lifted, we see volumes rebound. Similarly, with children's birthday parties as schools return, Assuming no further restrictions like wedding, we would expect to see that category bounce back. Looking at online, That channel is performing well, and we will continue with our planned investment to drive future growth. Online is one of the growth areas through the strategy review, which I will talk through in more detail later. The transition is underway to becoming an omnichannel retailer, allowing customers to shop whenever and however they want. The strategy will show an increased focus on complementary gifting and party categories to enhance the offer and substantially increase the addressable market. And importantly, we will shift the focus of Card Factory from being a product led to a customer led business. Chris will now take you through the financial performance. I'd just like to give you the financial performance for the first half of FY 2022 for Card Factory. So just turning to the financial summary. Overall, sales were £116,900,000 against £100,500,000 last year. Overall, there was 60% of the year where the stores were allowed to trade this year against 48% in the prior year. That in terms of like for like on a 2 year basis against pre pandemic levels was minus 7.2. Online and Multi Channel was plus 50.2 with a net Card Factory like for like revenue of minus 3.7 delivering a loss before tax of £6,500,000 which was an improvement on the loss of £22,200,000 in the prior year. Net debt has been well controlled at £96,500,000 down from the £143,900,000 in the prior year. And including the lease liabilities, that is €238,900,000 Just moving to a little bit more detail around the like for like sales performance in terms of how card factors Form fall trends in terms of what we've seen in terms of SpringBoard data. The I'll turn straight to the graph on the right hand side, which effectively shows in the top line where the average basket value within our stores has been since reopening in April. As you can see, the ABV was put over 30% up at the start. And in terms of transactions, the bottom line, the green line were negative 30%. The middle line, the yellow one, is effectively the like for like 2 year sales performance. And as you can see on the line, there's been a steady underlying recovery in transactions And therefore, in terms of the like for like performance in that period. So just turning to the divisional analysis for Card Factory. Overall, in terms of store revenues, those were £102,700,000 again reflecting About 10 plus weeks at the beginning part of the year, we were in lockdown. Overall, the store transaction levels are still pre pandemic levels. However, we have seen that strong recovery and demonstrating the strength of the Card Factory brand. We continue to review the estate of just over 1,000 stores and to make sure they're in the right locations to maximize the sales, And we increased the net store estate by 3 during the period. It's fair to say we're seeing in terms of retail parks much stronger performances in terms of the footfall and like for like sales. Moving to the online performance. Even though year on year The online grew by 4.8%. We should bear in mind that actually the close down period in FY 'twenty two in terms of the stores Was lower and therefore that is a pretty strong performance. Getting personal was down 20.7%, but this was an internal decision within the business to go after more profitable sales and we're certainly seeing that within the bottom line where on pay per click transactions We're back in where we can see there's return on investment of them keywords. And in terms of partnerships, we've seen strong year on year growth at Plus 17.8 percent up to 2,300,000 Total retail locations have increased as well from 894 to 908. We've seen strong performance from Aldi and we've also agreed a contract renewal with them. The Reject Shop and Matalando were impacted by COVID restrictions in the period. I'd just like to turn to the margins of the business during the period. Overall, the cost of goods in the year were pretty much in line with the prior year in margin percentage terms and a slight improvement of 0.8 Percentage points being driven by how we've managed to utilize a lot of the aged seasonal stock from prior seasons into the new year. Also store wages, even though store wages are up about £30,000,000 against £23,700,000 This reflects really just the time in terms of less utilization of the CGRS scheme. And store property costs down at £4,500,000 from £6,900,000 Again, this relates mainly to the timing in terms of government Support in terms of business rates. And then turning to direct expenses and operating expenses, You can see that year on year we've managed to keep them costs flat or slightly down. The only other point Bridging down to the operating loss of £6,500,000 is the net financing expenses that's slightly up at £6,500,000 reflecting the blended average of the financing that's in place now of just sub 5%. One other important call out on the sheet Is the other income, one off income of £8,000,000 in the P and L. This reflects the government grants that's been received in terms of government support and non essential retail closures. Just turning to the free cash flow. We've seen a continued improvement in the cash generation of the business and largely driven by the improvement in sales and the profit performance overall. Two further call outs in terms of the cash flow is 1 on the net working capital where we've seen that GBP4,700,000 negative. This is purely down to the deferrals that we managed to negotiate with landlords on rents and with HMRC in terms of VAT. Further down the cash flow, you'll see lease liabilities that again is £1,700,000 negative. This again is being driven by just the timing on deferral of payments on rents into the current year. So overall, a very positive free cash flow plus £14,500,000 against £1,100,000 last year. One further important point on the free cash flow is the note at the bottom. You might remember at the year end, I mentioned that there was €21,000,000 of rent deferrals that we negotiated, and there was a further €19,000,000 of VAT payment deferrals also. As we sit here at the half year, we've now got £26,000,000 of rent deferrals as we've had further lockdown periods and we've negotiated further Rent deferrals there and the VAT liability deferrals are now £7,000,000 I expect by the year end that into FY2023 Most of the payments will have unwound in 2022, but by 2023 there could be between £6,000,000 and £12,000,000 of them deferral payments hitting that year's cash flow. So I'd just like to move to the liquidity update. You'll remember in May of this year, we've given an announcement in terms of the securing of 225,000,000 of financing facilities for the business. This was with replacement covenants until March 2022. Other important terms that were mentioned in the agreement in May was that we have the requirement to either raise €70,000,000 net equity By July 2022 or to prepay £70,000,000 using funding from other subordinated sources. It's fair to say as a business, the capital investment has been tightly controlled to preserve cash whilst at the same time investing in the long term strategic objectives. The focus is on maintaining a capital structure that is conservative yet efficient in providing long term returns to shareholders. And the group's capital policy continues to be under review as trading conditions become clearer and as we see the transactions on the High Street recover. I'll now pass back across to Darcy to give an update on the refresh strategy. As previously stated, I would like to use today to provide an update on our future growth strategy. We have undertaken a review of the 5 year strategy, which was originally announced at the Capital Markets Day last July. We needed to understand the impact of COVID on the strategy, but I also wanted to ensure that it could deliver the growth that shareholders expect and contained enough ambition to seize the opportunities that exist both within the markets we serve and the markets we could exploit to create maximum shareholder value. Working at pace, we have stress tested and evolved the strategy. And for reasons I will explain, there's still more work to be done in some areas. However, what we have is a strategic approach that will build on our market leading proposition in cards, while positioning the business to access broader market opportunity. So let me start by clearly outlining our vision for Card Factory, where we will be by the end of FY 2026 and when we've delivered on our opening our new future strategy. Over the next 5 years, we will transform Cars Factory into the 1st omnichannel brand in our space to help customers celebrate each and every special occasion. We will become the number one U. K. Destination for all customers seeking unrivaled quality, value, choice, convenience and experience. And we will broaden our international footprint, putting more cards and gifts in the hands of more customers around the world. Delivery of the strategy is expected to drive an acceleration in revenue growth and margin expansion, growing revenues to over £600,000,000 by FY26, with approximately 20% generated from online and multi channel and retail partnerships, while creating a business with a low cost base and a highly scalable business model. We expect the delivery of the strategy to result in a shift in product and channel mix, alongside investment, resulting in PBT margin trending towards 17% over the long term. By building on our existing quality and value heritage, We will take Card Factory on a journey that provides our customers with more convenience by providing greater access to our products wherever they are and wherever they want them. More choice by building upon our leading card offer to expand into complementary ranges and an exceptional customer experience that makes Card Factory a destination brand for more customers. If we want to make best use of our nationwide store estate and respond to today's customer needs, then we need to transform the business from a predominantly store driven retail model to a full omnichannel offer that uses existing and invested infrastructure to become the 1st card and gifting retailer to provide a seamless physical and online customer experience. This will provide access to all categories, anytime, anywhere, including our personalized products by app or website at home or on the move. We believe that omnichannel provides the opportunity to leverage our brands, store estate, vertical integration, quality and value proposition as well as our investment in our online channels to materially increase our market share of the online market. The UK online market for cards was estimated to be worth €515,000,000 in 2020. That's up from €177,000,000 in 2019. We are therefore targeting circa 10% of group revenues from online by FY 2026, up from 2% today. The budgeted omnichannel capital expenditure will include near term investment with areas of note including enabling our customers to access our brand and offer at home, on the move via our apps and in store through web access. This will allow our customers to access our extended range in store and we'll test options to understand appetite and investment return. Increasing the range of shipping options to home or store that meets every budget, increasing our fulfillment capacity, accuracy and speed to deliver against our customer service promise and enabling customers who want to self serve throughout the journey to be supported by an AI experience focused on recommendations, personalization, notifications and live chat. The store portfolio We'll be optimized to ensure Card Factory has profitable stores in high footfall locations with 100 new stores added to our existing portfolio of 1,000 stores across the UK and Republic of Ireland by FY 2026. These new store openings will be focused on underpenetrated areas, including London and areas of high footfall, including retail parks. The store optimization program will continue with locations selected based on profitability and returns. And our stores will remain a vital route to market and are not simply legacy assets. Store revenues will continue to grow in their own right, but will simply be a smaller proportion of the mix as online growth accelerates. Initiatives such as targeted pricing and an increased gifting range are expected to improve in store sales, increase average basket value and offset the structural trend of minor year on year footfall decline. As part of our omni channel transformation and through continued platform investment, we expect to increase our share of the online market from 2% to 10%. Our new Business Development Director, Syed Kazmi, joined in late August. And over the coming months, We will have designed and started delivery of our new partnership strategy. This will allow Card Factory to reach more UK customers for modest investment in additional convenient locations that meets the growing demand for impulse buying. Internationally, we will use the group's expertise, including card design and customer insight to expand into new territories through partnerships into markets that show attractive characteristics for entry and disruption. While continuing to be a card led retailer in a stable market, where 76% of adults are card givers, We will meet customer demand by providing greater choice through complementary gifting and party ranges, opening up access to a large market worth £40,000,000,000 per annum in the U. K, capturing more customer spend and increasing average basket value. We are already leaders in party balloon categories. And for stores, we will be looking at expanding into additional categories such as stationery and confectionery with other categories also being explored. This will not come at the expense of cards in store. It's about making smarter, more agile choices about the space dedicated to complementary categories. The card range will be broadened in terms of introducing more modern and contemporary choice and a clear focus on the proposition in store to help shoppers. However, we expect the SKU size will remain the same. Online will have a far broader offer more across complementary categories. And at all times, our vertically integrated business model will remain a unique point of difference, affording us the flexibility to respond to market changes and enabling efficient high quality production at attractive margins, supporting online growth with lower cost per unit. Providing a new omnichannel service, Card Factory will improve the customer experience and access to its offer by being the 1st card and gifting brand to bridge digital with its store estate. This will be supported by an improved customer understanding from new data capabilities, including through the rollout of the group's new RP platform in quarter 4 this year. This will allow us to understand and respond to changing customer habits and preferences, including insight on price elasticity, enabling us to evolve our pricing approach while maintaining high levels of customer satisfaction. We will continue to invest in our brand based around quality and value to increase customer awareness and improve trust. Lastly, we will develop our ESG strategy to be recognized as a socially and environmentally responsible business, building on the wide range of existing initiatives that we already have in place. These include the recently introduced foil balloon recycling that is available to any customer visiting our store. We also are proud to have increased our store recycling to 87% of all store waste. And we will be a positive contributor in the communities we are present in, and we continue to be proud of our association with the Macmillan Cancer Support for which we have raised $7,000,000 since the start of our relationship. So in summary, Our opening our new future strategy is built upon using our market position, customer loyalty and vertically integrated model to provide a platform for our new omni channel strategy, expanding into The gifting segment, which is highly complementary to the card giving market, where we are market leaders and which is highly resilient. Our refresh growth strategy will deliver sustainable revenue and profit growth, and we will be making further investments and development across channels to improve convenience, choice and experience for customers. Now with the Christmas season upon us, I want to provide an update on our preparations. We are well positioned with stock intake brought forward and Carrefractory's in house printing capabilities covering 70% of the range. We've brought forward recruitment to mid September, supporting the challenging market we face and system changes mean we can provide a smooth and speedy onboarding process to retain successful Christmas candidates. Almost all Christmas and everyday ranges will move to auto replenishment. This will ensure the right stock is in the right stores and we free up colleague time to focus on customer service. Our product ranges have been planned and built around 3 new Key design trends this year, including our character of the year, the Yeti, which is an amazing character and I'd encourage you all to go out and buy it. This is supported by lots of great value for money offers throughout the entire store, including cards from 29p, Fabulous gifting ranges from soft toys to monogram gifts to festive books and even amazing chocolate character decorations for the tree, all for only £1. Across our single Christmas card range, we've worked hard to significantly reduce the amount of glitter used throughout the range. In addition, we're pleased to have been able to remove all plastic from our box card range, saving the equivalent of 6,500,000 plastic bottles. So in summary, Card Factory is now well positioned for growth, targeting over €600,000,000 of sales by FY2026. We will open 100 net new stores adding to the existing portfolio of over 1,000 stores across the United Kingdom and the Republic of Ireland by FY 'twenty six. We will transition towards 20% of sales expected to come from online and omni channel and retail partnerships by FY 'twenty six. Our PBT margin will trend towards 17% in the longer term, reflecting shift in product and channel mix. And we will have completed our transformation to a full omnichannel offer. Thank you for your time today. We now look forward to answering any questions that you may have. Thank you very much. We've had quite a few questions on the webcast. 2. Our first Question comes from Vikram. He's got a few questions here. First one is, in the May trading update and annual report, The company intended to use best efforts to raise equity net proceeds of €70,000,000 But in the latest update, the wording has been changed to the company As permitted to facilitate these payments through the issue of new equity or through debt. The wording has been changed to exclude best efforts For X Series, why is this? Yes. Just to be clear, there's no change there at all. Best efforts is still the case on the equity raise Or to prepay through subordinated debt. So that's just an update on the presentation. There's no change in terms of the best FX requirement. Thank you. And another question for Chris, it's from Vikram again. He's got 2 questions. He's got 3 questions here. I'll ask them all at the same time. First one is, what is the due date for the term loan and CLBIS debt? 2nd question is, how much is And prepayments, do you need to make by July 2022 to avoid paying the £5,000,000 penalty? And his last question is, What conditions do you need to meet to be able to extend the RCF loan to 2024? So the first question, what was the due date for the term loan CL bills debt? That is effectively September 23 in the agreement. How much in prepayments do you need to make by July 2022 to avoid paying the penalty? So the way that works is effectively, if we raise €70,000,000 net equity by November, then we pay none of the €5,000,000 penalty. If we don't do it, so after July, we paid a full €5,000,000 penalty and then there's a ratchet in between. And if there's a short we come short of the €70,000,000 then the €5,000,000 is effective with pro rata on that amount. In terms of the extension through to September 2024, That is basically based on us doing a successful actuaries of €70,000,000 all the subordinated debt of €70,000,000 Thank you. And our next question is from Harvey Jones. What progress has been made on growing partnership revenues? And how close is Card Factory to agreeing any new deals? Thanks for the question. I think partnerships remains an important part of the strategy, and we continue to make progress. I think the biggest development is us hiring Saeed as our new Business Development Director, who is very experienced in this space. He joined us a few weeks ago, and he's in the middle of reviewing the work that we're doing and the strategy. So more information to come in the future. Thank you. Next question is from Richard Martin. Why are you not milking your state by extending hours, Not only on weekdays, but also on Sunday, specifically in areas that you're close to other longer opening stores. You can also on most of your shops Open for longer on Sundays. That's more of a comment. Maybe Darcy can address that one. Yes, sure. So we have a program where we review the opening hours of all stores, clearly, given the low price points And the labor costs, making sure that its economic is important. And Steve, our Retail Director, has a program where that gets reviewed frequently and we make changes as is necessary to the estate. Thank you. Next question is from Peter Canlis, who's asking, please can you expand on why online revenue Estelle so slowed in absolute terms or why is growth slow? What will make Card Factory's online market share grow over the next 12 months and coming years? Yes. So in terms of online, we were relatively late coming to online. The platform went in about a year ago, then we've launched the apps. And also during lockdown, We had capacity challenges on fulfillment. So we continue to invest in the technology and continue to invest in fulfillment, so that we can trade the peaks well. And we continue with the strategy that I've outlined. We've done a deep dive On online, we have a robust strategy and program of works that will help us grow that business Perfect. Thank you. Our next question is from Adam Tomlinson from Liberum. And Adam is asking, can you please talk a bit about how you see the outlook for costs heading into 2022 And freight, wages, rents and utilities, etcetera. And what levers do you have to help mitigate pressure if they persist? Nivas, a question for Chris. Yes. So just taking the main terms, I suppose in terms of freight, everybody has seen in terms of increase There will be some headwind from that in the second half of the year. In terms of mitigation, one of the things that we're looking to do is to effectively Try and flatten the intake, so we're making your best container. So we're doing to mitigate that. In terms of wages, so things like agency staff and things that cover in Christmas trading period. Obviously, there's been a lot said in the market in terms of pressures in that area. We've gone quite early in terms of recruiting those individuals Making sure we're as covered as we can be. That's going well. But clearly, there's still a bit of a runway in yet to go into Christmas. So far, 2. We're not seeing any major sort of wage inflation there, but it's time to go. There could be some pressures on agency In terms of rents, overall, we've been getting no good rent reductions. Obviously, these ones where the leases are coming off Most of the rents agreed where we did deferrals were deferrals. Some were with Some cash savings on them, but overall in the year, the ones that we've renegotiated, we've got good results on. There's somewhere we've tried to take advantage and bring Some of the rent reviews forward a little bit and negotiate early while the market is where it is. And then finally on utilities in particular, obviously electricity and oil prices where they've been heading. We're hedged out for the next 3 years as we own new electricity. So we've talked steps to mitigate That cost. But yes, I suppose the big one there is the freight piece. And as a business, we're looking at what levers we can pull in terms of offsetting that Cost as well as how efficient that we can bring the stock in. Thank you. And there's actually another 2 questions from Adam, so We'll take them all now. This other question was, how are you looking at your headroom to increase prices? And can you give any more informationupdates on discussions you're having with potential new retail partners? Thank you. I think from a pricing perspective, clearly, we're putting some price increases last year, which we have seen no adverse effect on volumes. We are doing a piece of work around Understanding pricing elasticity, I think the way we should be thinking of this is pricing is a lever for us To use to offset inflation as well as other things around productivity that we're working on. And we are focused on maintaining our value proposition, at the same time, making sure that Appropriate inflation is passed on. In terms of partnerships, I've got nothing To update further beyond Sai joining, Antti is reviewing the strategy as we speak. Thank you. Next question is from Toso, who's thanking you for the presentation and asks, What is the criteria used to choose between the capital raising mechanisms? And he says, at the current market cap of €70,000,000 equity raise We caused an enormous dilution for current shareholders. What are less damaging options? And why is this path not clear yet? So the process of which we've been through, we did the refinancing, as we said in May. The Board are considering all options. Clearly, we're taking into account all stakeholders, including shareholders On the point there, if it was an equity raise option, but also there's other debt options that we're looking at as well. So We there's nothing to update at the minute on that. But rest assured, myself and the Board are actively looking at all options. Our next question is From Patrick Gerard, who's asking, is there a forecast when the decision to increase the company's capital will be taken? Considering that the lockdown is over and the future prospect of revenue is at least equal to the pre pandemic level, what is the probability that It will be necessary to raise more funds via the issuance of new shares. On that one, I'd have to refer back to my previous answer really. Like I say, we're looking at all the different options in terms of debt options and the equity raise options as per the agreement in the Bank agreement. Thank you. Perfect. Another question from Harvey Jones is, Should Card Factory consider a marketplace model for its website, I. E, allow complimentary retailer space on the website, but not to handle their own fulfillment, An example being Flowers. I'm not really sure if that's a question, but maybe Darty can address that. Yes, I can take this one. Yes. So as part of the strategy, we talked about expansion in gifts in complementary categories And doing gifts fulfilled by 3rd parties is definitely an option and something we're looking at. Thank you very much. Next question is from Ulrich, who's got 2 questions. First question is, is there any chance the loans to be repaid with 2022 could be financed by operative results without going for a capital increase And the listing shareholders' capital. Have you maybe contacted your major shareholders if they can support you concerning organizing Financing through subordinated loans. The second question is concerning the international partnerships, Which countries are you approaching now? And that answers questions. So yes, a similar sort of Line of questioning. Again, there's no further comment I can make really apart from we have consulted with all stakeholders as you'd expect us to. But ultimately, the decision will rest with the Board on what their options are. The second point concerning international partnerships, which countries we sort of laid out in the Capital Markets Day, which countries Those would possibly be. And as Darcy mentioned, Saeed now being on board for only for a short period as he's been with us. Clearly, one of the key things he's assessing is the U. K. And internationally what the opportunities are. Thank you. We have a question about the YETI. Maybe Darcey can take this one. How invested is Card Factory and the YETI? Look, we have our products team, both the commercial team and the design team, I have great confidence in and I think we're YETI we're excited about. We think it'll be a good seller this year. And we have basically purchased appropriately. So yes, so we're excited about it. Perfect. And next question is from Kate Calvert from Investec. She has three questions. First question is, Is there an opportunity to take out cash rent going forward or given looking at add to add circa 100 as a flat profile, More appropriate year on year. And second question is views on pricing architecture with recent trials of higher price points and potential to stretch it. And our last question is on the partnership model, can you talk about where you're up to in developing a pipeline? And should we expect news on additional contracts in the next year? I'll take the first Question. So I suppose just reiterating on rent, what we agreed during the lockdown periods is negotiated with landlords In terms of deferrals, now there was options to maybe get cash reductions on then deferred rents, Well, only on the basis a lot of these deals were signed up to longer tenure. And one of the things we've always kept in the portfolio is to keep it as Flexible as we can on that top 2.5 years, reducing the lease lengths, which I think is even more important that we review that as the 1,000 stores and locations. Like I said, we are getting rents down in terms of the negotiations that we currently have in as leases are coming up for renewal. And in terms of The circle 100 stores that we're looking to add on, we still think 1100 stores is achievable. The focus will be on making sure they hit the investment criteria and hurdle rates. That 18 month payback has always been something that we've looked at. So That will still remain the focus when we're assessing adding that 100 stores. But I think equal, if not more important, is more of the 1,000 stores, their location Thank you. And we actually have another question from Kate as well. She says, can you give some detail on investment needed in manufacturing to deliver your refresh strategy. Sorry, we did I don't think we answered this point. Section 23, apologies. Arcelor, you can answer the second part. Yes. So I think In terms of I think in terms of the other two questions around price of architecture, I've answered a few questions. Look, I know there's Quite a lot of energy for us to be very specific about what headroom we think there are in prices, And that's a really difficult question to answer. I think I will say that historically, it's an underutilized lever in the business, And it's one that we are that we do have at our disposal and we will use appropriately. But it is also about maintaining the balance between value and price. We have recently done a full market competitor review of pricing to know where we So I think it's just I don't think I have any more detail, no kind of other than that. And again, quite a shift model. I think I've addressed that question. Perfect. And yes, just back on to Kate's I have a follow-up question. Can you give some detail on investment needed and manufacturing to deliver your refresh strategy? I mean, the manufacturing side and the vertical integration side has always been obviously A competitive advantage and something that we've always focused on investing in the right areas. So in the past, we've invested in The envelope is how we use foil, which is quite an expensive commodity, more efficiently. So that's constantly under review. We don't think there's an area where there's a massive underinvestment or anywhere where We think we need to make a big investment. We invested in a new printing machine last year or so, Which was double the speed. So we've got quite a bit of capacity in there. So really the other investments we'll look at in the manufacturing side is Where we still think we can do things to try and enhance the cost of goods, particularly, obviously, around cars. Thank you. We have another question from Vikram. This one can be for Darcy. Can you discuss more about your competitive landscape in the gift market compared to pure online player or other card pure online only players? Yes. So there are a few things I'll give. So if I first of all, in the original strategy when we did The customer segmentation work, that work was done around cards. So we refreshed that work, We're looking at the customer segmentation based around gift. So we've got some data and we have some Things in research for us to test around the gifting. So I think that's one area. The second thing would be As I think, we and most of our competitors do seasonal gifts very well. So it's Christmas, Mother's Day, Father's Day. I think there's an opportunity to us to do everyday gift and to own that space. I think also the gift market is a €40,000,000,000 market. That is not the total addressable size for us, but It's a significant sized market, and therefore, there are opportunities for us to explore We know that 72% of customers or people in the UK send gifts with cards. And again, that's why there's a great opportunity for us. Thank you. Our next question is from Saran. With the current increase in supply chain costs, how has that impacted your cost of goods sold? Approximately, How much of your cost of goods sold pre COVID were made up from freezing costs and how much were year to date? So I think you can see from the half year margin position that we've managed margin quite well even With some of the freight issues. I think on the overall product margin, we still remain quite confident in Certainly, I think second half of this year, we will see A little bit of pressure in there, like I say, on freight costs. I think that's sort of trebled, but we're looking what we can do to mitigate it. So I won't give a profit or margin forecast on that. But yes, that's probably the one area of concern as well Thank you. Another question from Harvey. To what extent have stores which saw a closure of Clinton's or other competitors benefited. Have these stores seen an improved LFL performance due to increased small area market share? Yes. I think to do with Clinton's, I think and not all the competitors, I think it's always thought that Once the Clintons' Club, we'll pick up all them sales. There is a slightly different customer that goes into Clintons, but equally, I think we've eroded a A lot of that customer base over the years. So we do see an uplift in the like for like sales. In terms of locations, we know all the locations are Clintons, Pave Chase, etcetera, locations in the town and where we want them to be. So we're pretty comfortable even for instance, if all the stores which are closed, obviously, have been in a reducing portfolio and restructuring Paperchase. We're already in pretty good locations. There's fairly limited locations where we want to relocate where our Clinton store The next question is from Richard Martin, It's more of a making more of a statement. He's saying, extending shopping times do not cost that much more. And where I see your stores, they could be extended as a Consultants being one of the first to close. And what are your thoughts on that statement, Darcy? So I think I'm not sure, Richard, you asked this Question earlier and therefore, you didn't think the answer was fully enough or if it's a repeat. Look, we do look at footfalls by hour, and we have a criteria by I want to make decisions about what the shop opening hours are to effectively capture customer needs, but also to make sure that the shops are profitable. 2. It's something that we review frequently. Happy to take a specific look at it. Thank you. That concludes our webcast Q and A today. So I'll hand back to yourself Darcy for any closing remarks. Great. Thank you very much for hosting. To everybody on the call, we really appreciate your time and engagement today, and we look forward to engaging again in the future at our next update. Thank you all.