Cardsharp: Is There A Chink Of Light In The Shop Window?

At last, thought Cardsharp a glimmer of hope amid the endless stream of terrible news. Smaller shops are tentatively opening their doors in many countries across Europe, and although it would seem we, in the UK will still be under lockdown for another couple of weeks at least, the tills could be ringing again after that.

But until then all of us in the greeting card trade are in the survival business, and we must all as much as possible try and support each other. Cardsharp’s utmost respect goes out to all those retailers that PG’s editor, Jakki Brown spoke to (via Zoom) for last Thursday’s PG Buzz, who were willing to put their head above the parapet and answer questions about the situation honestly and from the heart, in such difficult and uncertain times. (https://www.pgbuzz.net/leading-card-retailers-zoom-in-for-pg-buzzs-first-industry-meet-up/)

Above: Last week’s PG Buzz.net Zoom meeting of some of the UK’s leading retailers, including Karen Hubbard (of Card Factory), Paul Taylor (of Cardzone), John Procter (of Scribbler) and Mark Janson-Smith (of Postmark).
Above: Last week’s PG Buzz.net Zoom meeting of some of the UK’s leading retailers, including Karen Hubbard (of Card Factory), Paul Taylor (of Cardzone), John Procter (of Scribbler) and Mark Janson-Smith (of Postmark).

In particular, Cardzone’s owner Paul Taylor, who has done his level best to make sure suppliers are up to date and play fair with landlords. Paul, even before this crisis, had been critical of the business practices of some less successful retail chains, who had used legal if dubious practices to gain a commercial advantage. His love of the greeting card trade and strong sense of morality comes shiningly through in his words and actions.

And credit also is due to Karen Hubbard, ceo of Card Factory, who with the unenviable task of trying to calm the nerves of investor shareholders, landlords, suppliers and thousands and thousands of staff, still had the nerve to comment on difficult questions, all be it, within the constraints of running a publicly listed 1,000 shop retail chain.

It is not surprising to note that many private equity-owned businesses retail businesses are among the worst offenders for ruthlessly delaying payments to suppliers and landlords. As indeed, they were among the first to employ the dubious financial tactic of the strategic CVA (Creditors Voluntary Agreement).  Many of the people who are prominent in pulling the strings in these businesses are invisible, and often leave the dirty work of imparting any bad news to suppliers, to frontline operatives. These companies are certainly going to be among the most ruthless in the months to come, because of their high leveraged debt levels and higher interest payments to service.

With this in mind, Cardsharp was interested to read the comments of the government’s late payment ‘Tsar’, Philip King (there seems to be a tsar for everything these days!) “This is not about transactions and invoices, but real people” and admonished “the worst examples of payment practice.”

PLCs, like Card Factory by contrast, are held to much higher standards, and must be seen to be more accountable. They can also access funds by tapping investors to shore up the balance sheet, a course of action currently being pursued by WHSmith.

Above: WHSmith has raised £166m by issuing more shares to shore up finances during the Covid-19 crisis.
Above: WHSmith has raised £166m by issuing more shares to shore up finances during the Covid-19 crisis.

So, Cardsharp was a little unnerved to read a piece in the business press that suggested private equity, encouraged by cheap borrowing and the record low prices of PLC-listed retail chains, might take advantage of the uncertainty to snap up some perceived bargains. Pets at Home and Halfords were mentioned. Not Card Factory, for the moment anyway.

Above: PG’s columnist is taking to the digital world via PG Buzz in between the magazine being published.
Above: PG’s columnist is taking to the digital world via PG Buzz in between the magazine being published.

Mind you, if private equity can be opaque, then Clintons, our largest privately-owned specialist retail card chain, can be virtually invisible at the top. At the time the crisis broke, Clintons was allegedly involved in some challenging discussions over rent with landlords, after undergoing a phoenix-like administration last December. Given that the second quarter from March to June is probably a loss-making period for Clintons, and that it has furloughed most of the employees, and may have reached an accommodation on the rent, it may not be that much of a financial disaster for them. However, Cardsharp wonders when the crisis abates, Clintons’ owners, the Weiss family, will be willing to provide the considerable amount of finance needed for the chain to thrive.

Cardsharp fully accepts that his speculation about the ‘big boy’ retailers is scant consolation to the many independent card retailers who have been forced to close their doors with no end in sight and without the muscle to play hard ball with landlords. Thank goodness that at least some of the Government grants due to them (either £10k or £25k depending on the rateable value of the shop unit) is starting to trickle through and suppliers have been heartened that some of this is being used to settle their invoices. We all need a bit more of a trickle, but a trickle is better than nothing, thinks Cardsharp as at least it keeps things moving, albeit slower than we all would like.

 

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