Greetings retail giant pays £2.5m cash for South African card and gift packaging business
Card Factory has paid £2.5million cash to acquire the entire issued share capital of SA Greetings, the leading greeting card publisher and card retailing group in South Africa.
The announcement came at 11.30am this morning, 25 April, and is the first international acquisition for the UK’s largest greetings retail specialist, though it has a distribution agreement with the Reject Shop chain in Australia.
With a head office and main warehouse in Johannesburg, and sales offices in Durban and Cape Town, SA Greetings Corporation (Pty) Ltd and its subsidiaries, which trade as SA Greetings, also includes 24 Cardies retail stores, with four further outlets operated by franchisees, plus a roll-wrap production facility.
Of its first international acquisition, Darcy Willson-Rymer, Card Factory’s ceo, commented: “We are delighted to have completed the acquisition of SA Greetings and look forward to working with our new colleagues. Under the continued leadership of SA Greetings MD Willie Engelbrecht, we will closely collaborate to further enhance and develop opportunities for the Card Factory and SA Greetings businesses.
“SA Greetings brings with it significant experience operating a wholesale business, which can inform and support development of our retail partnership business, and is entirely aligned with Card Factory’s strategic plan for international expansion.”
In addition to giving Card Factory “a foothold into our target South African market”, Darcy explained the business will also be looking to utilise SA Greetings’ “mature printing, merchandising and warehousing facilities to understand how we can deliver similar local capability in other target markets.”
Industry stalwart and former UKG ceo John Charlton has been chairman of SA Greetings since 1998, when it was part of American Greetings, which sold it in 2007. John continued as chairman and a shareholder, including when the company was then sold on to management in 2015.
John assured PG Buzz that he has no intention of retiring “as you will shortly see”, he teased.
As well as being a licensee of UK Greetings, SA Greetings has historically also distributed other British publishers’ designs.
The acquisition was financed from Card Factory’s working capital and is expected to be earnings enhancing. SA Greetings realised an unaudited EBITDA of £591,000, and a PBT of £165,000 from unaudited net sales of £9.4m during the 12 months to 28 February, 2023, and had a net asset value of £5.8m and gross assets of £8.5m on this date.
In the statement the company said South Africa is one of the target territories for Card Factory’s partnership expansion, and added: “The acquisition of SA Greetings, supports this strategic growth pillar by providing access to key wholesale accounts through the company’s printing, merchandising and warehousing capacity.”
Card Factory’s share price has risen sharply over the past three years from 31p to 109.60p today, although it is still down on the 235p levels of five years ago.
SA Greetings’ origins stretch back to 1939, when it was founded under the name of Christian Publishing Company. It opened its first greeting card retail outlet in 1977, which has grown into the Cardies chain across South Africa.
In 1996 SA Greetings was sold to American Greetings Inc, and Creative Stationery was acquired soon after. In October 2015, all shareholdings were taken over by the executive directors and overseas investor Depesche, making the German-based company’s popular Top Model range available to SA Greetings to distribute.
With three major brands – Creative Stationery, Carlton Cards, and Entertainers – the Cardies store division, and continuous partnerships with key suppliers, the company has grown into South Africa’s leading brand for gift dressing and social stationery.
The announcement of Card Factory’s acquisition of SA Greetings came on the day Card Factory’s preliminary results for the 12 months to 31 January, 2023, and its Capital Market Strategy Update were due to be revealed.
However, after the group’s auditor KPMG LLP requested additional time to complete its standard audit procedures these have been moved to Wednesday, 3 May, 2023.
Card Factory said its performance in the year ended 31 January, 2023, includes revenue of £463.4m with expected EBITDA of at least £112m and profit before tax of at least £52 million, both of which are ahead of the expected outturn that was reported in the company’s January 2023 trading update.
The statement said: “The board is assured by KPMG LLP that the delay is caused by a requirement for additional time to allow them to complete standard audit and completion procedures.”
The analyst presentation for the preliminary results will be held at 10am on 3 May in central London, followed by a Capital Markets Strategy Update hosted by Darcy, and will feature short presentations from the Card Factory senior management team who will provide a broader update on strategic plans through to FY27.
Top: One of SA Greetings’ 24 Cardies stores now owned by Card Factory
