Good news at greetings retail favourite following Taylor family takeover
Clintons has returned to profit since being taken over a year ago by the Taylor family through their Pillarbox Designs business.
In the year to 29 June, 2024 – which includes four months under Pillarbox directors Paul Taylor and his son James, who also own the Cardzone group – the retail business swung to a pre-tax profit of £8.1million from a £5.4m loss in the previous 12 months.
According to the annual report and consolidated financial statements filed at Companies House under the name Esquire Retail, and signed by Paul on 27 March, the good news came despite a 14% drop in sales from £96.5m to £82.6m, as 15 stores were closed, leaving the estate at around 170 stores nationwide and down from 1,757 staff to 1,415. The £3,930k borrowed before Pillarbox took over was repaid in full early in 2024 and no new finance was required for the remainder of the year.
In an interview with PG outside of this statement, James told of plans for a new store concept set to be unveiled in May, but added that trading conditions for some Cardzone and Clintons store locations in Q1 this year “have been tough” although both Valentine’s Day and Mother’s Day sales were positive.
With James and sister Alex, marketing manager of the family business, having also spoken back in June about the challenges they’d found on taking over Clintons, the annual report added: “The directors feel this is a satisfactory performance, given the circumstances. Sales growth continues to be a challenge and the location of stores remains key to achieving this. The High Street continues to be unpredictable and the company is seeing reduced footfall in the stores year on year.
“The company continues to monitor performance of the existing estate and to close the poor performing stores which, while impacting on turnover, should improve profitability moving forwards.”
Saying that margins in the retail business “remain key” the directors have been focusing on this as well as to reduce stock write-downs and promotional activity that reduces it, and the report said: “The directors have had some success in growing the margin.”
Clintons had been owned personally by the Weiss family, founders of American Greetings, the parent company of UK Greetings, since 2012 and the restructuring plan the firm entered into before the sale removed certain liabilities while reducing the levels of business rates paid to March 2024, but had a “significant impact on the profitability levels”.
Just a few weeks after Pillarbox Designs acquired the retailer – after several attempts over the years to buy it, with the two parties getting really close to sealing a deal just before Covid, then meeting again from September 2023 – it was announced that the Weiss family had taken a 10% shareholding in the group and Jeff Weiss, the great-grandson of AG’s founder Jacob Sapirstein, appointed to the board.
The recent report referenced the extra staffing costs which have just been imposed on businesses: “Like many other retailers, the company continues to face significant cost pressure on wages given the increases in the national minimum wage. Conversely, energy costs for the business began to ease during the year with the deal in October 2023 representing a material saving compared to the deal for the prior year. The company is constantly looking for ways to increase efficiency to mitigate the impact of any cost pressures and to drive store profitability.”
Identifying principal risks and uncertainties, the fact most of the store estate is leased on under five-year deals was mentioned “as there are no assurances that the renegotiation of leases will be successful” and it said “the global market conditions are causing price increase and availability issues”.
The report added: “The start of 2024/25 has continued similar to the previous year. Footfall on the High Street continues to be down on the same period pre-pandemic. The directors continue to look for opportunities for growth and new stores.
“The company sees investment in its current portfolio as key to success and plans to continue a schedule of store re-fits throughout the coming years.
“The group now has two retail businesses in Cardzone Limited and Esquire Retail Limited. The director will be closely looking at the synergies available between the two businesses to help drive growth moving forwards.”
In a PG article on Q1 trading, James said it was a “big concern” that trading had been “challenging in a number of locations with transactions on some weeks being down 10% or more”, but added Valentine’s Day came in marginally ahead of last year in both Cardzone and Clintons, while “Mother’s Day has been more positive thanks to a longer run in versus last year. our seasonal singles performance is comfortably up, which is good”.
He said the focus remains on “cleansing a lot of older stock which we either have in the business already inherited with the Clintons deal, or continuing to honour previous stock commitments” and that there will be significant changes with the new everyday card range launches for both businesses in the second half of the year.
And, despite the profit news in the just-released documents, James commented: “We are under no illusion that Q2 and the remainder of this year is going to be very tough. April’s payroll changes and increased NI contribution will put a lot of added pressure onto both businesses.
“Service charges in shopping centres continue to increase and who knows what could happen with business rates, we don’t hold much faith! We have had no significant trading lift for over seven months now so we will tread cautiously and keep a close eye on all forms of expenditure.”
