Celebrate life’s moments

Capital Markets PresentationCard Factory plc’s New Strategy

The first choice for greeting cards

Key takeaways:

973 stores reopened and trading by 3 July 2020; with 1,015 stores trading today

Sales from stores exceeding initial expectations:

– Like-for-like sales down only 21.6% (compared with 50% reduction forecast for first month of reopening)

– Average spend up 24.9%

– Online sales up 69% year to date; up 121% during lockdown and up 61% since store reopenings started

H1 revenues expected to be approximately £100m

Net debt at 19 July 2020 was £144m, below original forecast, aided by agreed deferred payments to suppliers / landlords

1

Morning trading update

2

AgendaTopic Speaker Role Time

Introduction Paul Moody Executive Chair 10m

Market Context Pierre Hyde Strategy and Insight Director 10m

Winning Card-led Retail Proposition Adam Dury Chief Commercial Officer 12m

Growing in More Places Kris Lee Chief Financial Officer 8m

Retail Partnerships Chris Beck Executive Director – Business Development 6m

E-commerce & Multichannel Glyn Williams Customer and Multichannel Director 6m

Manufacturing & Supply Chain Andrew Wasley Executive Director – Manufacturing and Supply 6m

Lowest Cost to Operate Paul Moody Executive Chair 3m

Financials Kris Lee Chief Financial Officer 12m

Summary Paul Moody Executive Chair 4m

Our vision

Our mission

3

Card Factory aspires to be recognised

as the world’s best greeting card retailer:

everywhere, and for all occasions, the

first choice for greeting cards.

Card Factory’s purpose is helping

people celebrate life moments by

making our products affordable

and available for everyone.

Clarity of ambition

4

Differentiated market leadership

1Data from Card Factory Market Tracker 2020, which is based on a nationally representative survey of over 2,750 card shoppers in the UK.

Resonant brand meaningHelp people put money back into their

pockets, without compromising on the

most meaningful moments in their lives

Better at what mattersCard Factory is ranked #1 by shoppers

on ‘wide range of cards’, which is the

single most important choice factor1

Commanding market leadershipDistinct brand and strong customer

ratings translate into selling 1 in every

3 greeting cards in the UK1

Sustainable competitive advantage

5

Design

Retailing

Manufacturing60creative designers andverse writers inWakefield, Yorkshire

190 millioncards manufactured per

year in Baildon, Yorkshire

>1,800 distribution points includingmore than 1,000 retail stores

Challenges we have faced

6

Card volume reduction

YoY (1-2)% volume

No evidence of acceleration

Covid-19 disruption

Store labour costs

>20% of sales

Minimum wage main rate has increased 38% since 2014

Currency devaluation

$100m foreign currency purchases per annum

GBP to USD down 27% since 2014

Online shopping

Year on year channel shift

Fewer competitive advantages

Profit chosen over growth

Decline of high street

Legacy estate in locations less favoured by shoppers

Demand migration to impulse missions

Demographic renewal

Different giving occasions

‘No occasion’ giving

Product innovation

7

So what’s new?Historical four pillar strategy

Like-for-like growth

New store rollout

Business efficiencies

Online development

01

02

04

03

Moving into a new phase of growth

Sector-leading card

shopper insights drive

improved performance01Winning card-led retail

proposition

02New channels,

formats, countries

and routes to market

Available in more places,

however customers shop

Ingrained, defensible

competitive advantages03Advantaged, robust and

scalable central model

Winning card-led

retail proposition

8

Strategy frameworkHelping customers celebrate their life moments –

Affordable and available for everyone.

01

02

03

Available in more

places, however

customers shop

Advantaged,

robust and scalable

central model

Leadership in

card choice

Innovation

and authority in

complementary

categories

UK&I store

estate

New retail

formats

Strategic

international

markets

Rest of

the world

Distinctive and

defensible pricing

strategy

Growth in under-

penetrated customer

segments

UK

partnerships

E-commerce

and multi

channel

Sector-leading

shopper insight

In-house manufacturing

and supplyLowest cost to operate

Leadership,

engagement

and capability

Positive impact

programme

Market context

Section 1

9

Pierre Hyde

Card giving is ingrained in British cultureUK Card Penetration by Demographic(%)1,2

By Gender:

By Age:

By Household Income:

By Region:

79 73 75

Female Male Other

68 76 75 78 79 80

55-6445-5416-24 25-34 65+35-44

6175 76 80 82

£20-30k£10-20kUnder £10k £30-40k Over £40k

75 75 76 79 78 78 74 69

MidlandsWalesNorthern Ireland

Scotland South England

North England

East England

London

Card Penetration by Country(%)1

76

53

50

46

41

UK

Canada

USA

Australia

New Zealand

1Penetration refers to % of adults who have purchased at least 1 greeting card in last 12 months. Market surveys conducted by Card Factory and Dynata in 2019 and 2020. 2Internal modelling.

10

Historical Forecast Historical Forecast

Cards declining -1% pa, mix changingUK Greeting Card Volume, 2017-24F(m)1,2

UK Greeting Card Value, 2017-24F(£m)1,2

862 837804

652698 684 667 652

4251

71

176131 143 150 153

828

202420212017 2018 2019 20232020 2022

816

Online

Stores

806

903 888 875

829 827

-2%

-5%0% -1%

943 990 980 973

102 128177

439 318 340 352 357

1,324

1,223

1,3301,334

2017

1,206

1,006

2018

1,158

2019 2020 20242021 2022 2023

1,326

Online

Stores

1,3351,382

1,331 1,330

0%+4% -4%

0%

1Internal market modelling, using data from Card Factory Market Tracker 2020 and validated against modelling by OC&C Strategy Consultants over several years.

Includes inputs from third parties e.g. GCA, Kantar, Nielsen. 2Excludes multipacks / boxed cards.11

Shopper preferences are evolving

12

Occasion shiftGrowth in new and non-standard occasions, and in buying cards for no particular occasion

Decline in traditional occasions, particularly Christmas

Mission shiftMore than 80% of cards are purchased on planned missions

Growth in ‘impulse’ missions in which the card purchase is unplanned

Gives rise to ‘convenience’ as a purchasing criterion

Channel shiftOnline growing from a small base (c.8% of volume in 20191)

Distinct customer characteristics, criteria and behaviours

Covid-19 step-change: up to 40-50% of card volume during ‘lockdown’2

1Card Factory Market Tracker 2020, validated against modelling by OC&C Strategy Consultants over several years. Excludes multipacks / boxed cards.2Internal modelling.

Among greeting card shoppers, behaviours differ significantly by:

Segmentation predicts behaviour

13

GenderFemales buy more cards

Males spend more per card

ChildrenPeople who have had children buy more cards

Continues after the children leave home

Attitude to valueInfluences how much is spent

Influences which shops are chosen

These variables are

strongerin explaining behaviours than

traditional demographic indicators such as age

and income

14

Example customer segments

AngieFamily-focused

Cute, sentimental styles

26 cards per year

£1.16 per card

Chooses on price, value and range

Also shops at B&M, Asda

17%

volume

55%

share

FrankOlder and higher income

For friends and family

20 cards per year

£1.86 per card

Chooses on range, availability and quality

Also shops at Sainsbury’s, Paperchase

11%

volume

18%

share

Duty-driven

Less interested, less engaged

14 cards per year

£1.63 per card

Chooses on convenient location, range and availability

Also shops at WHSmith, Tesco

Ian

10%

volume

31%

share

15

Card Factory is uniquely positioned

Other specialists(20-25%)

Shopper Ratings for Wide Range of Cards and Value for Money1,2

(Av. Score; % Volume Share)

1Data from Card Factory Market Tracker 2020. 2Online-only retailers not included in chart as they have different buying criteria and results are not equivalent.

Discounters(5-10%)

Grocers andconvenience

(30-35%)

3.6 3.8 4.0 4.2 4.4

4.0

3.5

4.5

Average Shopper Rating: wide range of cards1

Ave

rag

e S

ho

pp

er

Ra

tin

g:

va

lue

fo

r m

on

ey

1

Bubble size = volume share

Not shown: online-only players(<5%)

Card Factory(33%)

Winning card-led retail proposition

Section 2

16

Adam Dury

17

Strategy framework

Winning card-led

retail proposition

Helping customers celebrate their life moments –

Affordable and available for everyone.

01

02

03

Available in more

places, however

customers shop

Advantaged,

robust and scalable

central model

Leadership in

card choice

Innovation

and authority in

complementary

categories

UK&I store

estate

New retail

formats

Strategic

international

markets

Rest of

the world

Distinctive and

defensible pricing

strategy

Growth in under-

penetrated customer

segments

UK

partnerships

E-commerce

and multi

channel

Sector-leading

shopper insight

In-house manufacturing

and supplyLowest cost to operate

Leadership,

engagement and

capability

Positive impact

programme

Proposition built for shoppers’ needs

Increasing market share requires leadership in card choice

Over 25m shoppers each year: more data than competitors

Proprietary customer segmentation and primary research

Comprehensive NPD utilising vertically integrated model

Investment in people and restructuring commercial function

Card category growth is highly margin accretive

18

Wide range of cards

Availability of cards

Convenient location for me

Value for money

General quality of cards

Ease of finding the card I want

General style of cards

Specific ranges of cards

Cards at different price points

Low prices

Look and feel of the shop

Service from store staff

Range of complementary products

Recognised brand name of retailer

Customer Choice Criteria, 20191

Inc

rea

sin

g im

po

rtan

ce

to

cu

sto

me

rs

1

2

1

2

1

1

3

1

Card Factory Score2

Top in Market

Second in Market

Third in Market

1

2

3

1Data from Card Factory Market Tracker 2020. Purchasing criteria are for out-of-home shopping only (not online). Scores are constructed by ascribing numerical values to defined qualitative labels,

e.g. “Very Important” = 10 points, “Not Important At All” = 0 points. 2Competitors are scored out of 5 for each criterion. Arithmetic average of scores by shoppers who use it as their main shop, and

other shoppers, is shown.

18

Giving more space to bestsellers

Vertical OptimisationFor the amount of space allocated to

each range of cards, maximise the

bestselling SKUs within that range

Horizontal OptimisationWithin the total space dedicated to

cards, reorganise so that more of it is

made available to faster-selling ranges

Increase Card SpaceEnsure that customers have the widest

range of card choice across the estate;

in smaller stores this means reducing

other categories

Realign Seasonal Merchandising TimingTake a more dynamic approach to

launching seasonal ranges into stores,

so that valuable space is not taken away

too early from everyday card ranges

1919

20

Realign seasonal merchandising timing

Seasonal card ranges go out too early

Opportunity cost in cutting back everyday range

Christmas 2020: expect 3x volume density in affected racks

Approach to be replicated for all seasons

Potential size of prize up to £7.5m annual sales (ex VAT)

0

20

40

60

80

100

120

140

160

180

Card Volume per Rack per Day (Stores Only)(#, 7 Day Moving Average)

Christmas

Everyday

July JanuaryAugust September October November December

Christmas cards on

sale from 13 August

Christmas rate of sale overtook

Everyday in mid November

21

Maximise bestselling SKUs in ranges

Analysis showed inconsistent performance in card volume per rack for different sized stores

Manual merchandising approach prioritised operational efficiency

New data-led approach maximises availability of bestselling SKUs from each range in all stores

Piloted approach in humour range: +10% LFL

Potential size of prize up to £7.5m annual sales (ex VAT)

Cards per Rack by Racks in Store – Female Cards (Stores Only)(k)

2.0 2.5 3.0 3.5 4.0

10

8

12

14

Number ofCard Racksin Store

Card Volumeper Rack

Larger stores have more racks

Rate of sale per rack was

strongest in the larger stores

(potentially reflecting the better

range of choice)

Narrower assortments should

focus on bestsellers, which

would normally deliver

increased rate of sale

22

Price increases to offset cost inflation

History of maintaining price points in well-recognised architecture

No longer sufficient against escalating costs

trialing shows we can increase prices without losing volume

We will aim to offset cost inflation through directly repricing lines

Identified first batch of sticker-price changes for FY21 and completed first full rollout of 59p to 69p pre-lockdown

Customer response will be closely monitored

Up to £6m contribution per annum from already identified changes, of which £2.5-3.0m from the 69p change already executed

Results of 59p to 69p Regional Trial(% Volume Moved)

Original Prices

New Prices

79p

29p

79p

69p

29p

98%

0.5%

1.5%

59p

Authoritative new categoriesToday customers visit primarily for card-led missions

Offer in complementary ranges is popular but too fragmented

Opportunity to narrow category breadth and provide greater authority

Trialing range depth in balloons showed we can drive incremental footfall

Reviews identified other areas to strategically drive growth

23

24

LFL +3% per annumStore Like for Like Growth(%)

-0.5-0.7

FY23-FY25Target

FY19A FY20A FY21-FY22

+c.3 pa

Covid-

impacted

years

Available in more places, however customers shop

Section 3

25

Kris Lee Chris BeckGlyn Williams

26

Strategy framework

26

Winning card-led

retail proposition

Helping customers celebrate their life moments –

Affordable and available for everyone.

01

02

03

Available in more

places, however

customers shop

Advantaged,

robust and scalable

central model

Leadership in

card choice

Innovation

and authority in

complementary

categories

UK&I store

estate

New retail

formats

Strategic

international

markets

Rest of

the world

Distinctive and

defensible pricing

strategy

Growth in under-

penetrated customer

segments

UK

partnerships

E-commerce

and multi

channel

Sector-leading

shopper insight

In-house manufacturing

and supplyLowest cost to operate

Leadership,

engagement and

capability

Positive impact

programme

27

New store openings are profitable

Assumptions for new store openings

Store-specific sales forecast and cannibalisationforecast

Wage costs inflate by c.5% pa without mitigating actions

c.£65k capital expenditure for store fit-out

Financial hurdles

Year 1 contribution >£40k; Year 3 >£60k

Capex payback period <24 months

NPV / IRR vs other potential investments

Forecast Cumulative Contribution v Capex by Store Cohort(£m)

Pre-Covid

Number of

Openings47 51 58 51 54 55 47

-5

31

-3 -3-4

FY14

36

FY15

38

FY16

17

-3-3

FY17

21

FY18 FY19

20

-4

17

FY20

ForecastCumulativeContributionto Maturity

CapitalExpenditure

Targeting 1,100 stores in UK&I

28

Majority of stores re-opened following lockdown, c.20 closures

New store openings: 11 in FY21, then further c.140; payback criteria maintained

c.50 proactive closures over 4 years where stores are modelled to become unprofitable

Chart excludes c.25 relocations – net nil for store numbers

c.9% annualised rent savings assumed upon lease events

Mitigating actions could improve position

1,022 1,013

FY20 Stores

Plan Closures

+11

Plan Openings

FY21 Openings

-20

FY21 Stores

FY21 Closures

+c.140-c.50

Target Stores

c.1,100

Number of Card Factory Stores, UK & Ireland(#)

Core Card Factory only,

does not include new formats

Case study: Preston

29 1Mapping by Javelin Group. 2FY20 or annualised.

Map shows town centre of Preston

Card Factory has 3 stores in the town centre, plus 1 on the outskirts (not shown)

Each is located in a distinct retail zone (left)

Shoppers are unwilling to travel far for cards

However, two stores are too close together; one will close

Town centre clearly supports the 2 remaining stores, and will likely retain some of the sales from the closed store

Same principles apply to partnerships, with no evidence of any cannibalisation because mission sets are different

217,000

462,000

77,000

Volume of Cards Sold per Preston Store1,2

(#)

1.5 miles,

30 min walk

387,000

30

Share gain in UK stores channelGroup Share of UK Single Greeting Cards – Stores Channel(% by Volume)

Progressive increase in volume share within stores channel

Combination of commercial initiatives and adding more locations

Further growth via partnerships; lower volume per distribution point

34%35%

Stores

2018(FY19)

RetailPartnerships

2019(FY20)

2024(FY25)

Target53%

31

Strategy framework

Winning card-led

retail proposition

Helping customers celebrate their life moments –

Affordable and available for everyone.

01

02

03

Available in more

places, however

customers shop

Advantaged,

robust and scalable

central model

Leadership in

card choice

Innovation

and authority in

complementary

categories

UK&I store

estate

New retail

formats

Strategic

international

markets

Rest of

the world

Distinctive and

defensible pricing

strategy

Growth in under-

penetrated customer

segments

UK

partnerships

E-commerce

and multi

channel

Sector-leading

shopper insight

In-house manufacturing

and supplyLowest cost to operate

Leadership,

engagement and

capability

Positive impact

programme

32

Partnerships access incremental volume

Provide access to:impulse missions increasing share of existing customers

new customers who cannot otherwise access Card Factory

Collaborative working: to capture existing demand

to grow volumes and efficiencies

Proven model:through partnership with Aldi (and trialing with Matalan)

operating in over 500 stores

Aldi, UK

33

Insight-led category solutionCard Factory provides insight and tools to operate a low cost model

Access to existing designs that resonate with customers

Card Factory branded or own label

Contractual models tested as supply arrangements and franchises

No contract will be PBT rate dilutive to the group

Matalan, UK

Market research in all major international markets during 2019/20

Scale markets are US, Canada and Australia (plus New Zealand)

Market volumes are stable, card prices are generally high

No evidence of disruption at scale by a credible value-led player

Identification of suitable partner brands to approach

34

International: ripe for disruption

34

Higher quality

Higher price

Lower quality

Lower price

3.5

4.0

4.5

3.5 4.0 4.5

Customer Rating for Price

Customer Rating

for Quality

Card Factory UK

The Reject Shop

Competitive Environment – Australia Example(Bubble Size = % Visited LTM)

Entry model

35

Product-led: to enter international markets and create brand recognition

Partner with retailers of some scale that want to grow more market share

Partnering provides access to footfall-driving consumer brands

No or low capex models when compared to own stores

Earnings enhancing driven by market share gain and a lean operating model

Picture

The Reject Shop, Australia

36

The Reject Shop in AustraliaEstablished card offering, large space allocation, but undifferentiated against competitors

Single cards category solution, branded Card Factory

Roll out to 355 concessions completed in Q1 2020

Significant growth in volumes and market share

Five year contract

37

Strategy framework

Winning card-led

retail proposition

Helping customers celebrate their life moments –

Affordable and available for everyone.

01

02

03

Available in more

places, however

customers shop

Advantaged,

robust and scalable

central model

Leadership in

card choice

Innovation

and authority in

complementary

categories

UK&I store

estate

New retail

formats

Strategic

international

markets

Rest of

the world

Distinctive and

defensible pricing

strategy

Growth in under-

penetrated customer

segments

UK

partnerships

E-commerce

and multi

channel

Sector-leading

shopper insight

In-house manufacturing

and supplyLowest cost to operate

Leadership,

engagement and

capability

Positive impact

programme

38

Standalone e-commerce offering2012 – Site launch2015 – Migration and relaunch

2017/18 – Range & Merchandising 2019/20 – New Platform Development

39

Lockdown brought scale and challenge

+69%

+121%

+61%

Lockdown23 March to 14 June

Year to Date

Since Lockdown15 June to 19 July

Online Sales Growth1, FY21(%)

1Includes Card Factory and Getting Personal. For 3 days to 19 July, Getting Personal data are not yet available and have been estimated on a prudent basis.

200,000 new customers in 8 weeks

Different customer mix

Record daily volumes

Challenging to service demand

Fulfilment investments brought forward

‘Halo’ effect continuing post-lockdown

40

New platform and propositionNew Foundations Market Leading Card Offer Destination to Celebrate

Life Moments

41

Integration of Getting PersonalIn

cre

as

ing

pri

ce

po

int

Increasing diversification beyond cards

Brand Positioning(Conceptual)

Acquired in 2011, specialises in personalised gifts

Ceased to be profitable as independent business

Will be managed as a complementary brand with a second store-front on the Card Factory platform

Will benefit from shared cost base

42

Evolving towards multichannelCurrently Card Factory Online can only be shopped through the website and for home (or recipient) delivery

Adding convenience to the proposition:

– Launching mobile app by end of FY21

– Click and collect and in-store printing trials underway

Multichannel propositions provide differentiation vs online-only operators

Customers enabled to shop ‘their way’: seamlessly across channels to unlock full brand potential and scale

43

Share gain in growing online channel

3%2%

Target11%

2018(FY19)

2019(FY20)

2024(FY25)

Group Share of UK Single Greeting Cards – Online Channel(% by Volume)

FY20 sales: £19.4m, majority from gifting categories through Getting Personal

Growth is concentrated in Card Factory

Online card market projected to double in value 2019-24

Share gain from 2% to 11% of online card volume

– New platform, advantaged proposition and multichannel elements provide differentiation

– Increased marketing supports growth

FY25 sales target: £60m, increasing proportion from cards

Margin increases with scale; target PBT to match or exceed stores channel

– 95% volume manufactured in-house

– Fulfilment efficiencies

Advantaged, robust and scalable central model

Section 4

44

Andrew Wasley Paul Moody

45

Strategy framework

Winning card-led

retail proposition

Helping customers celebrate their life moments –

Affordable and available for everyone.

01

02

03

Available in more

places, however

customers shop

Advantaged,

robust and scalable

central model

Leadership in

card choice

Innovation

and authority in

complementary

categories

UK&I store

estate

New retail

formats

Strategic

international

markets

Rest of

the world

Distinctive and

defensible pricing

strategy

Growth in under-

penetrated customer

segments

UK

partnerships

E-commerce

and multi

channel

Sector-leading

shopper insight

In-house manufacturing

and supplyLowest cost to operate

Leadership,

engagement and

capability

Positive impact

programme

46

Print manufacturing Leading-edge manufacturing techniques

£5m capex was invested across FY19 and FY20 to increase production quality and maintain unit costs against headwinds

c.£17m capex planned across FY22-25

– Increase capacity

– Permanently ‘repatriate’ 60m cards per annum, through development of robotic manufacturing to replace ‘handmade’ product elements

– Continually develop automation

Card Factory store volumes will be 75% UK-produced

47

Online fulfilmentInvestment into automation with proven partner

Reduction in touchpoints for fulfilment

Increased readiness for spikes

Reduced cost to serve

Capex payback 24-36 months

48

WarehousingClosed down 7 third-party storage units

Amalgamation into 2 central DCs, £1.6m annual savings

Voice picking technology installed in both DCs with further £800k annual savings and platform for further opportunities

Strategy framework

4949

Winning card-led

retail proposition

Helping customers celebrate their life moments –

Affordable and available for everyone.

01

02

03

Available in more

places, however

customers shop

Advantaged,

robust and scalable

central model

Leadership in

card choice

Innovation

and authority in

complementary

categories

UK&I store

estate

New retail

formats

Strategic

international

markets

Rest of

the world

Distinctive and

defensible pricing

strategy

Growth in under-

penetrated customer

segments

UK

partnerships

E-commerce

and multi

channel

Sector-leading

shopper insight

In-house manufacturing

and supplyLowest cost to operate

Leadership,

engagement and

capability

Positive impact

programme

50

Stock management improvementsLeverage investments in technology to reduce costs, reduce working capital and drive sales through increased on-shelf availability

TechnologyLine level stock at store level aligned with existing EPOS and auto replenishment solutions

StockholdingReduce in distribution centre through store visibility, eliminate need for stock in stock rooms for everyday trading, shape merchandising displays to hold stock proportionate to sales, and only pick and dispatch to store with full pallets or cartons

ColleagueReduce touchpoints for ordering, receiving, replenishment to shop floor, and stocktaking

51

End-to-end ERP implementationCurrent State

3 ERP solutions

Covering a narrow subset of the business

Highly customised and inefficient

Supplemented with many manual processes

End of life in 2021 / 2022

Future State

Single ERP solution

Covering core business functions, including

– Finance

– Supply Chain

– Buying & Merchandising

– Manufacturing

– HR

Best practice processes to drive quality and efficiency

Foundation for our business aspirations

Quality

Cost

Efficiency

Conceptual

Financial profile

Section 5

52

Kris Lee

Our highlights

Revenue target Underlying PBT2 target

53

c.£635m

Revenue from growth channels1

c.20%

Distribution points target

c.5,600

FY25

of FY25 total

FY25

Market share target

c.45% UK card volume

1 Online & Multichannel and Retail Partnerships 2 After accounting for IFRS 16 Leases

c.£105m

Low capex absorption

c.£16mUnderlying PBT2 to leverage range

1.2 – 2.6x

per annum (5 yrs)

FY25

Free cash flow / underlying PBT ratio

c.80% Average FY23-FY25

54

Targets

1 Presented on an underlying basis and includes the expected impact of IFRS-16 Leases 2 Free Cash Flow excl. Dividends & Funding Movements

Revenue by Channel (£m) FY17A FY18A FY19A FY20A FY25 Target

Stores (UK & Ireland) 378.9 401.7 415.6 429.1 500

Online & Multichannel 19.3 20.4 20.4 19.4 60

Partnerships (UK & International) - - - 3.0 75

Group Total 398.2 422.1 436.0 451.5 635

Profit Before Tax1 (£m) FY17A FY18A FY19A FY20A FY25 Target

Stores (UK & Ireland) 84.6 79.9 76.5 68.0 80

Online & Multichannel 1.8 2.0 (0.3) (1.1) 10

Partnerships (UK & International) - - - 0.4 15

Group Total 86.4 81.9 76.2 67.3 105

Free Cash Flow2 / PBT FY17A FY18A FY19A FY20A FY25 Target

Group Total 80% 84% 84% 72% 80%

Capex (£m) FY17A FY18A FY19A FY20A FY25 Target

Group Total 13.1 10.4 12.0 14.5 12

Capex front-loaded,

average £16m pa

over FY21-25

55

LFL sales growth

Strategic Plan UK&I Stores LFL Sales Growth(% YoY)

-0.5-0.7

FY21-FY22FY19A

+c.3 pa

FY20A FY23-FY25Target

FY21 and FY22

Covid impacts:

– Store closure period

– Transactions recovery path

– Partially offset by higher ABV

– Social distancing

Underlying footfall reductions

Commercial initiatives

Inflationary price increases

FY23 to FY25

Small reduction in market size and lasting shift to online produce step-down in footfall expectations

Underlying footfall reductions continue

Commercial initiatives

Inflationary price increases

Covid-

impacted

years

56

More points of distribution

Strategic Plan Number of Retail Sites(k)

40%

68%

1.5

9%

FY25 Target

32%

FY19A

91%

FY20A

40%

20%

International

Card Factory Stores

UK Partnerships& Other

1.1

5.6 Targeting 3-4x expansion of total distribution points from c.1,500 in FY20, across UK and international markets1

Retail partners’ sites outside our own estate will make up the bulk of distribution points, but group revenue per partner distribution point is significantly lower

Indicative

1 Since year end the number of distribution points has increased from c.1,500 to over 1,800 because of the rollout of concessions in Australia.

57

Diversification of income sources

95% 95%

79%

5% 4%

FY25 Target

c.12%

c.10%

FY19A FY20A

1% Online

Retail Partnerships

Stores (UK&I)1

436 452 c.635

Strategic Plan Sales (Net) Breakdown by Channel(£m, %)

Business de-risked by reducing reliance on UK&I Stores channel

Entering new geographies of strategic scale, including the US, via retail partnerships

Supplementing e-commerce channel with new multichannel propositions that create differentiation

1Includes Printcraft third party sales (<£1m) and gift card sales commission (<£1m)

Renewed market share growth

By Volume(%, m cards)

By Value(%, £bn)

20% 20%31%

2019 (FY20)

1.3

2018 (FY19)

1.3

2024 (FY25)Target

1.3

32% 33%

2019 (FY20)2018 (FY19) 2024 (FY25)Target

45%

888 875 806

58

Card Factory Group Share of UK Single Greeting Cards

59

Return to card-led focus

Strategic Plan Sales (Net) Breakdown by Category(%)

Most footfall is driven by card-led missions

Authoritative range width to be in all store sizes

Increasing proportion to be produced in-house

Highest-margin category

55% 54%59%

45% 46%41%

GreetingCards

FY19A

ComplementaryCategories

FY20A FY25Target

Majority of greeting cards are designed and manufactured in house: high product margin

Complementary ranges include gift wrap, bags and boxes, balloons, party products, gifting and other sub-categories

Ancillary products are stamps and carrier bags

60

Greeting cards are highest margin

84%

63%

57%

6%

SingleGreeting

Cards

ComplementaryCategories excl.

Ancillary Products

Boxed Greeting Cards

AncillaryProducts

Stores (UK & Ireland) Product Margin Rate1 by Category, FY20A(%)

52%

Stores Sales

Participation

43%

2%

3%

1Product margin before stock loss and provisions

61

Management of product margin

Strategic Plan Product Margin Rate Evolution, FY20 v FY25(%)

Stores product rate margin improvement in plan

Channel mix shifts away from UK stores towards those with structurally lower product margins

Results in dilution of group product margin rate

70%

74%

67%4%

FY25 GroupTarget

(4%)

Growth in Online &

Multichannel

FY20 Stores (UK&I)

(3%)

FY25 Stores (UK&I)Target

Margin Improvements

Growth in Retail

Partnerships

New channels offer strong margins

Comparative Economics by Channel – ‘Today’ (% of Card Factory Revenue)

In partnerships, Card Factory’s revenue is the wholesale rather than retail sales – in the chart, percentages relate to the wholesale sales

In online, although there are no property or store labour costs, order fulfilment costs are significant; these will reduce with scale

Stores remains most profitable channel per unit of retail sales

Average set-up capex for a new store is c.£65k, while that for incremental online sales and partnerships stores is minimal

62

16% 16%

52%

22%12%

Stores (UK & Ireland) Online & Multichannel

Retail Partnerships

ProfitContribution

VAT

DirectCosts

COGS

63

Costs kept well controlled

Strategic Plan Operating Costs Evolution(% of Net Sales)

Continued step-ups in National Living Wage

Improved retail operating model

Small increases in Support Centre & IT costs

Managed realignment of total overhead

Central cost savings enabled by new ERP implementation and other efficiencies

Central Costs1

49

FY19A FY20A

Warehouse and Distribution

Property

FY25

Marketing

Other Direct Costs

Store Wages

5152

1Mainly support centre overhead and IT costs

Dividends:

• £344m returned to shareholders

• No dividends in FY21

• Continued low working capital

• Capital expenditure to support the growth strategy

• Return to shareholder distribution when prudently possible

64

Liquidity, dividends and capital policy

Capital policy:

No change to capital policy

Short-term peaks outside leverage range due to Covid-19

Liquidity:

• £200m RCF facility

• Option to access CCFF

• Good cash management in Covid response

• New covenants

• Dividend and M&A restrictions

• Net debt £144m as at 19 July

Summary

Section 6

65

Paul Moody

66

Strategy framework

Winning card-led

retail proposition

Helping customers celebrate their life moments –

Affordable and available for everyone.

01

02

03

Available in more

places, however

customers shop

Advantaged,

robust and scalable

central model

Leadership in

card choice

Innovation

and authority in

complementary

categories

UK&I store

estate

New retail

formats

Strategic

international

markets

Rest of

the world

Distinctive and

defensible pricing

strategy

Growth in under-

penetrated customer

segments

UK

partnerships

E-commerce

and multi

channel

Sector-leading

shopper insight

In-house manufacturing

and supplyLowest cost to operate

Leadership,

engagement

and capability

Positive impact

programme

Our strategyTo be a robust, scalable and sustainable international greeting card business, with diversified income sources

Its objectivesTo make Card Factory the first choice for cards –everywhere, and for all occasions

To set us on the path to being recognised as the world’s best greeting card retailer

Robust, scalable and sustainable

Its outcomesThis strategy will deliver balanced outcomes across the four key areas of our business:

– A superior proposition for customers

– Meaningful career opportunities for our people

– Attractive returns for shareholders

– Positive impacts on the world around us

Investment case

Popular and embedded brand, already demonstrating

ability to confer authority beyond greeting cards

Virtuous circle of design, manufacturing and retail provides barriers to entry

Only credible card specialist at scale

Cash generative model with diversifying income sources

Identified and proven sources of new growth

Clear pathway to restore sales and profit growth in

the core

68

Q&A

69