Card Factory plc

Good morning, everybody. Welcome to our interim results update for FY23. So this is our first hybrid event. And based on what the production team told me this morning, I have to somehow maintain eye contact in the room, but main eye contact on the camera for all of those that are virtual. So welcome to everybody. So I'm Darcy Wilson-Reimer, the CEO. With me today is Chris Lee, our Chief Financial Officer. And Chris will provide the financial performance update for the first half of FY23. And then I'll provide an update on the delivery of our opening our new future growth strategy and also provide you the outlook for the remainder of the year. Let me begin by saying that one year on from the launch of our new strategy, we're pleased with the progress being made across initiatives that are vital for the growth of our business. We're evolving our customer proposition and transitioning into the customer-centric business that we need to be to move Card Factory forward. And the first half has demonstrated that Card Factory remains a company that is loved both by customers and colleagues. And there's an energy from our colleagues to do the right thing. And that is reflected in our performance. So we're pleased to report a strong performance through the half, which reflects continued good momentum within the business, as well as the reversal of lockdown trends with customers choosing to return to the high street. Combined with continued growth in complimentary categories, this improvement was driven by our leadership in cards and the strong performance of everyday products across cards, gifting, party, and balloons. We saw good growth in life moments, such as weddings and christenings, as well as in cards with celebratory captions, which reflects a return to more normalized lifestyles and social events following the pandemic. This also demonstrates the success of our card strategy to meet customer demand through our strong value proposition and our focus on range optimization, leading to notable improvement in our year-in-year market share. At the prelims, we talked about the work being done to mitigate against inflationary pressures. And I'm pleased to report we have effectively managed these across the cost base. And Chris will talk you through this in more detail later in this presentation. We're seeing the pronounced shift in spend back towards stores, and this supports our continued conviction in the value of our store estate within our customer proposition and as an enabler to our omnichannel ambitions. And to that end, we are about to launch our first click and collect trials, which is an important milestone on our omnichannel journey. As a value retailer with an exceptional value for money offer, we have a strong customer proposition that is performing well within the current economic environment. And as we approach the important Christmas season, we are confident in our preparations. Finally, we've continued to strengthen our balance sheet with a significant reduction in net debt versus three years ago. So to discuss our first half financial performance in more detail, let me hand you over to Chris.

Thanks, Darcy. Morning, everyone. To just give the financial highlights for the half year to FY23. So it's been a good performance in the first half, so like for like sales in stores has been plus 6.1%. We've had effective management inflationary pressures as Darcy touched on, particularly around supplier negotiations, business efficiencies and the hedges that were placed in the business. We've successfully delivered the refinancing to September 25 with £150 million facility, and we've significantly reduced the debt by £74 million over the three-year period, despite a nine-month lockdown period. So, to reiterate, expectations in terms of FY23 remain unchanged. Just moving to the financial summary on the revenue. So revenue year on year was up substantially to £198 million. This was against the prior period, which had a period of 10 weeks of lockdown. However, against pre-pandemic levels, we've still grown sales by £2.4 million to £198 million. EBITDA as well was strong, 43.8 million against 23.6 million in the prior year. We opened a net new stores of six, taking the store portfolio to 1,026 and we opened our first London store. In terms of the PBT, £14.3 million against a loss last year of £6.5 million. And last year, bearing in mind there was £8 million of one-off grants from the government which were not received this year. Net debt at £96 million in line with last year. I'll come on to that's in line with expectations because of £32 million of deferral of payments during the pandemic. But overall, bringing the debt down from three years ago from £170 million. Cash from operating activities, £19.7 million. Again, I'll come on to this later around the deferred cash payments, why that's lower year on year. And then like-for-like from a group perspective, including online, was plus 4.1%. And as we've seen, recovery of the sales back to pre-pandemic levels, minus 3.1 on a three-year basis. Turning to light for light sales, I've touched on some of these on the plus 6.1. Card Factory Online did go back 30%. This was anticipated on the basis we haven't had lockdown periods in this financial year. That is still an 86% growth on pre-pandemic levels in HY20. And overall, Card Factory grew 4.1%. Getting personal was more disappointing behind expectations at minus 36%. But I think the key point in terms of the recovery is around the store transactions and ABV. So we've seen store transaction volumes up 9.4% year on year. And we've seen average basket value tail off slightly by 3.1%. But still a positive delta of 6.3%. And ABV continues to have increased on HY20 by 23%. So the key message here is, in effect, what we're seeing is transactions are recovering faster than what the average basket value is declining. Just moving to the graph on the right, the yellow line is, in effect, the light-for-light sales by month, year-on-year. And the blue line, in effect, is the three-year light-for-light position. So as you can see, the yellow line year on year, like for likes, has been significantly positive. The opening position April 22, where that was negative, that was purely because, as you'll remember, stores reopened in April 21, so there was a halo effect in terms of the comparative in the prior year. And then if we look at the three-year basis, you can see that recovery, as we've seen from June onwards, that basically the stores are into positive, like for like, even though... regardless of the fact that we've still got reduced footfall compared to hy20 pre the pandemic just moving to divisional sales overall group sales grew and in terms of the stores were 82 percent up on the prior year as i mentioned there was 10 weeks of lockdown the prior year but the actual light for light sales of the same periods being open, we were plus 6.1. So we're seeing a strong recovery. And you can see on the stores number and in terms of the bar chart, the yellow and the blue line, that we're back to pre-pandemic levels in overall store sales. I've touched on Card Factory Online, the 86% growth, and we're looking at 1.9 million of growth compared to HY20. And particularly what we've seen is growth in card in both personalised and non-personalised cards, as well as in gifting and party in terms of the online channel. In terms of the partnerships, partnerships have performed strongly. Half a million in terms of sales back in HY20, now to four million. And we're also looking at other opportunities in the UK and internationally. Just looking at the margin bridge, costs of goods and effects of the product margin did improve slightly, 0.6 percentage points. This was down mainly to currency. What we have seen though is we've managed to maintain product margins despite the increase in freight costs and raw materials that we've seen. We've looked at different things in terms of supplier base, container fill and other levels of mitigation. Store wages, as a percentage, reduced over the period. There is a one-off benefit in there of £2.5 million, which is a release of a provision on CGRS. And store property costs, as expected, increased. This is because the prior year we benefited from grants from the government in terms of support for non-essential retailers. While direct expenses fell as a percentage of sales, And operating expenses did increase to £22 million. But again, there was in the prior year some CDRS support in that number. And we have also invested in customer-led insight and brand proposition, digital online as part of the strategy. And one of the key areas in terms of delivering the strategy is the investment in the IT infrastructure. Overall then EBITDA 43.8 million against 23.6 last year. So both in EBITDA margin percentage and in pounds we've seen a significant improvement year on year. Just looking at the three-year net debt bridge, this is excluding lease liabilities. So in HY20, we had net debt of £170 million. This fell by HY22 to £96 million. One thing that should be borne in mind is as part of the protection of the balance sheet during the lockdown periods, we agreed deferrals on VAT and rent. So there was 32 million of deferrals in HY22 that have effectively hit the first half of this year. So even though net debt overall between last year and this year looks to be the same, there is an underlying 32 million cash generation in that period. In addition to that, you can see there's some one-off cash costs of £7.5 million in terms of the debt refinancing, which will be non-reoccurring this year. But you can see in terms of the green bar, the EBITDA, effectively all this debt reduction has come through mainly through cost initiatives we've made and also the general performance of the business. So just looking at free cash flow for the first six months. Operating cash flow obviously has improved off the back of improved profitability. There's three other areas probably to call out around net working capital, movement, capex and lease liabilities. So there's a 35 million swing on net working capital. Seven million, as I've mentioned, to do with deferred VATs. There was £8 million in terms of this one-off grant income in the prior year. And one of the other things we've done, there's probably £11 million in terms of additional stock build. This is where we've took the decision to bring Christmas stock in early, obviously with the disruption in ports, so we're well positioned in terms of trading Christmas. In terms of CapEx, a slight increase, £2.1 million. Again, this is planned. Again, we're protecting the balance sheet in the COVID period. This is now the reinvestment effectively in the strategy. And lease liability payments, this is a normalisation. As I mentioned, £25 million of deferrals were in the prior year. So when looking at the free cash flow, although it's saying it's £22 million negative, you've got to bear in mind that there's £32 million of deferrals in there, plus there's this time indifference on £11 million of additional stock build. So refinancing. The refinancing was successfully completed in April 22. This included the removal of any requirement to raise equity. It's a £150 million facility made up of £100 million RCF and then £30 million of term loan and £20 million of CL bills. We're now in a position that I think the balance sheet allows us to invest, capital invest in terms of driving the strategy. There is a restriction on dividends until the CL bills and term loans are repaid. And the board intends to maintain a perhaps more prudent leverage ratio of 0.5 times to 1.5 times on a pre-IFRS 16 basis. And we'll focus on paying dividends at the appropriate time. At the minute, the earliest the board is considering commencement of dividend payments is January 24, based on the latest management view. so to conclude on the outlook to reiterate expectations for the full year remain unchanged We anticipate that cost headwinds will continue in energy, currency, freight, material costs and wage inflation being the biggest ticket items. Particularly around energy, we're hedged until September 24 and these hedges were put in place before the hike we've seen in the wholesale market. We've got good coverage in terms of currency and FX. In terms of freight, that has been a significant headwind. That is reducing. And we're also, as I mentioned, focusing on container fill. And in terms of material costs, we've got multiple sources that we're exploring and have explored in terms of getting the best prices. And in terms of wage inflation, we've looked at particularly in stores around business efficiencies and where we can use technology to take tasks out of store. So in essence, through a combination of target price increases and efficiency savings, we've protected the cost base of the business. The full impact of the price actions will come through in the second half of the year. So at that juncture, I'll now pass back to Darcy to just discuss the strategy update. Thank you.

Thank you very much, Chris, for the comprehensive update. It's been a year since we launched our opening our new future growth strategy, and I'm pleased to provide an update on the delivery and the progress to date. So if I recap, in summary, our strategy will transition Card Factory from being a store-led retailer into a market-leading omnichannel retailer of cards and gifts. Through this strategy, Card Factory is well positioned to become the UK's number one destination for all customers seeking unrivalled quality, value, choice, convenience and experience. And we're working to transform Card Factory into a leading omnichannel brand in our space to help customers celebrate each and every special occasion. And it's our aim to become a global competitor, putting cards and gifts in the hands of more customers. We continue to deliver on the strategic initiatives, specifically around omnichannel, complementary categories and partnerships, with further milestones achieved since the last update at the full year results in May. So let me start with omnichannel and the delivery of our omnichannel strategy is about to begin with the launch of Click and Collect trial in 84 stores. As we test the approach and understand customer response, we'll be able to ensure the successful rollout of a full omnichannel offer in FY24 and beyond. And we continue with our digital investment, completing the re-platforming of CardFactory.co.uk, which has opened up product and ranging capability across our gifting categories. And as the success of our omnichannel strategy relies on the strength and breadth of our store estate, we continue to focus on the analysis of our first five model stores that we built, and we're pleased with the progress of that initial rollout, and we'll continue to evaluate performance and identify learnings as we extend the model store format. And by trialling two small format trial stores in central London, as well as six new stores in the Republic of Ireland, we continue with our plans to diversify our store estate in under-penetrated markets. Looking ahead, as well as the click and collect rollout and the opening of five more model stores by the end of the year, we continue to invest in our core infrastructure with the second phase of our ERP implementation commencing after the Christmas peak. This will enable the ability to view stock in all areas of the business, but also enable the integration with future partners both in the UK and internationally. Moving on to complementary categories, I'd like to highlight some of the significant complementary category growth successes that we've seen in the first half. Whilst we continue to retain our leadership in cards through our successful card strategy, we are on track to grow our share of the complementary category with its addressable 5 billion UK market opportunity. Starting with balloons and parties, we saw clear evidence that our customers have begun celebrating social events and other occasions, resulting in a strong performance in balloons and party with an increase of 29% like-for-like in party sales. Expansion of our confectionery range to meet a broader set of customer needs saw a sales increase of 98% on a like-for-like basis. We've also launched new ranges in licensed gifts and party wear. And category expansion will continue through the next half, particularly with regards to confectionery, home accessories, toys, as well as flowers and alcohol on cardfactory.co.uk. We remain confident in the potential to attract new partners in the UK and internationally. And to succeed, we need to build the right partnerships. And to that end, we've now completed a thorough analysis of the international opportunity. And by working with global data, we've researched and sized international markets for potential opportunity. And in doing so, we've identified India and the Middle East as additional targets compared to what we previously announced. The team is now developing a pipeline of partners and building out internal capabilities to support delivery in newly identified markets. We've continued to make progress through our ESG strategy on developing and delivering positive change across the business. We'll remain on track with our efforts to reduce waste and to improve sustainability of our product ranges. With 90% of products being free of single-use plastics by the end of FY24, and all new cards and gifts produced for Card Factory are now glitter-free. And by the end of FY24, we expect to have sold through any existing stock containing glitter. Our focus on developing a diverse, inclusive and socially responsible culture in Card Factory continues to be a priority and is supported through our progressive DE&I strategy. And with the support and extensive consultation of all our colleagues, we continue to have a positive impact across communities in the UK and the Republic of Ireland alongside the Card Factory Foundation. Notable progress since the last update in May includes entering into a new partnership with the Woodland Trust to support their work to protect, restore and create native woodland in the UK. Commencing work with a specialist energy consultancy to provide enhanced insight and recommendations to reduce scope one, two and three emissions. And commissioning a review of our ESG structure and strategy to support the creation of a future roadmap. And we received best place to work recognition in the Q2 results and we're a top 10 best place to work employer. And I'm delighted on behalf of our colleagues to have achieved that. So looking ahead, I'd like to start by summarizing our preparations for the Christmas peak. While we continue to benefit from the agility provided by having our own UK-based production facility, we have put in place a number of actions to mitigate any potential supply chain disruption from Far East orders and across the UK ports by bringing forward ordering and delivery of product. Further enhancements have been made to the store stock replenishment, which will increase availability of our products to our customers. And we will also benefit from having cleared through legacy stock created by the pandemic. Finally, recruitment of the 6,000 seasonal colleagues that we need for the Christmas seasons commenced, and we're confident of our ability to meet our staffing requirements for this seasonal peak. So in summary, we've delivered significant milestones in the first half of FY23 as we progress our strategic growth plans, and we are on track to continue with this momentum. We have continued to develop our digital proposition about launching the first phase of our omnichannel strategy. We'll leverage the strength of our storage state to transform Card Factory into an omnichannel business. Our value for money proposition is resonating with customers across an increasing range of products and price points. and the financial strength of the business continues to build, delivering a highly profitable business with strong cash generation and a significant reduction in net debt. We remain comfortable with the expectations for the full year, considering the combination of good trading momentum in everyday product, alongside the inflationary outlook and market uncertainty around consumer behavior through the Christmas season due to the cost of living impact. And whilst we remain mindful of the challenging economic background or very challenging economic background, we believe our value proposition positions us to navigate this well. We remain confident that our customers will want to continue to celebrate life's moments and that value for money is increasingly important to them. The first half demonstrated our ability to effectively manage inflationary headwinds, which, as you've heard from Chris, has been achieved through a combination of management actions and targeted price increases. For the remainder of FY23, we're well covered from a hedging perspective on both energy and US dollar foreign exchange exposures. And we continue to be excited by the growth opportunity for Card Factory. And we remain focused on evolving our customer proposition and transitioning into a customer-centric business that we need to be to move Card Factory forward. So thank you for your time today, whether it's here in the room or online. Chris and I will now be delighted to take your questions. So we're gonna start, we'll start by taking two or three questions in the room and then we'll move to online and basically we'll alternate. If you're in the room, we're going to pass you a mic. The mic's important. Even though this is a small room, it's important for the people that are online to be able to hear.

Morning. Kate Calvert from Vestec. Two questions for me. First question is you've got your target of 600 million sales, FY26 out there, of which I think about 60 million was supposed to be online and 60 million online. in terms of partners. You're slightly behind that, obviously, at the moment. Are you still sort of quite comfortable with that kind of shape of development going forward? And my second question is on the production side. Can you talk about the investment in production to sort of help scale up the business because you sort of pulled some of that during COVID. So are you back on track in terms of putting that investment back in? Thank you.

Thanks, Kate. So first of all, I will say in terms of the strategy, we're confident that the strategy we outlined in terms of the shape, the size and the pillars Look, in terms of the kind of timescale on the 600 million, we started the year at footfall down minus 30 percent. That's improved. We're now minus 15 percent. The timing we'll have to see. So I think we'll continue to see how things develop. And I think we'll, you know, sometime. next year we need to give a full update in terms of, you know, kind of what's happening in the market and what the effect of footfall is and what that might do to the longer term outlook. But in the meanwhile, I think the strategic pillars are absolutely right and we're focused on effectively the execution of those, which will ultimately deliver results. you know, the long-term growth. In terms of production, so I think, so I'll look at production in two ways. One is the production facility of our factory in Bradford that produces card. And then in the same location, the fulfillment for online. And so, yeah, we continue to make investments in the factory and in the fulfillment, paste and sequence in line with the growth. And so things like we will see an extension to the building, you know, putting in mezzanine floors, those types of activities that will allow us to do production, but also looking at machinery lifecycle and all of that. But I would say, yes, we're well placed and on track to deliver any changes that we need to do. And again, with fulfillment, the way we're building the business model is an approach that But effectively, it's wherever and however the customer wants to shop. So if you want to shop in store, that's fine. If you want to buy online, that's fine. And we just take a modular approach. So if the business shifts a bit faster online, then we can just ramp up the fulfillment. We physically own the premises. So our ability to kind of scale that up. And yes, I think there's a bit of future proofing of the business.

Morning. Adam Tomlinson from Liberum. First question is just on pricing. Can you maybe just talk a little bit about some of the price increases you've put through You talk about targeted price increases. Just a bit more color on that. Perhaps what you're seeing in terms of the competition and that relative price gap that you've always managed to maintain. Secondly, just on the omnichannel proposition. So you talk about click and collect. Again, just a little bit more color in terms of some of the other things that are going on in terms of the online proposition and how you're developing that would be helpful, please. And then the final question around international. Noted that you've picked out a couple of markets there today. Just maybe some colour around the scale of those opportunities in terms of the size of those markets, perhaps how they compare to the UK would be good as well. Thank you.

Okay, so let me start with pricing. So I think I have said not long after I joined the business that I think pricing was an underutilized lever in the business, and I also reaffirmed at our last update that I think inflation we need to cover through a combination of targeted price and whether it's efficiency or an efficiency is broad, whether it's efficiency of labor or redesigning product or whatever it might be. So on pricing, I think first and foremost, we're focused on the consumer and our value for money proposition. We are not going to do anything that jeopardizes the value for money proposition. And then it's about making sure that we're offering the right value to the consumer and that we have the right price architecture across the range. So 25 years ago, when the business was founded, we were selling cards at 29 pence. Today, we are still selling cards at 29 pence, and we probably have the largest value range of any of our competitors. And having that entry price point is absolutely critical. And then it's about having the right architecture after that. So whether it's 29 to 49 to 79, etc., So if I give you the example of how we move price and when I say we're focused on value. So when we relaunched the wedding range this year, we moved our exit price point from 249 to 299. But we didn't just take the same card and put the price up. What we did is we redid the card. So looking at the design, looking at the words, how much foils on it, how much embellishments on it. And therefore to the consumer, when they picked up the 299 card, they said, this is worth 299. So obviously focused on that value. And in doing so we've moved, we basically moved the price. So it's really important to maintain the value proposition, but it's all about getting the right architecture. And then in terms of our competitors, of course, everybody's faced the same pressures that we have. and we're advantaged with a vertically integrated model. So sticking with that point on the wedding range that I made, we were able ourselves to redesign the card in our own production facility to do the additional embellishments. And that's the advantage that we have basically in our model. But everybody is facing the same cost pressures and prices are going up a bit in the marketplace. All right, I'm clicking on Omnichannel. Look, on the Omnichannel, there's a lot of work behind the scenes. So when we were together in May, I'd announced that Sam had joined us as our new digital director. So he's in place, he's in the middle of updating the strategy, but in the meanwhile, getting to work on the stuff that we need to deliver. Hence, getting the re-platforming done, getting click and collect built. And then there's other modules that will follow behind that. So things like multi-ship, new products coming online. But equally, it's also about developing the capability and the ability to have continuous improvement in the customer offer, whether that's on how the web works, how the app works, to make it basically as simple as possible and easy as possible for customers. And so, as I say, a lot of work going on to do it. And then finally on international, effectively, we haven't put anything publicly about kind of size and shape of the market, but if I talk to you about the process. So we've gone through the desktop work that was done for the strategy using you know, global data who do this around the world, you know, utilizing Said, who heads up partnership, his experience. And so we've gone back through each of the markets to size what's the total card market, what's the English speaking market, who the competitors are, what the routes to market, you know, kind of might be. and then prioritizing that. And then there's a whole bit of work to build internal capability to do it. So for example, our systems before we put in phase two of the ERP, we can't ring fence stock would just be an example. So if you've got a container being shipped to Australia, And we've picked all the stores, but before we picked Australia, that container will leave empty, whereas our stores we could just pick tomorrow. So it's getting the infrastructure right to be able to service the markets and take away the spreadsheets and kind of other stuff. So that's kind of the work underway.

Yeah, I'll turn you out from Pamela Gordon. Just a couple of easy questions. I'll take those and Chris is going to take the hard ones. Wait till you hear them. Yeah, I just wondered if you could give us some update on the London store that's opened. how the initial trading's going and whether it's in line with the shape that you expected. So that's the first thing. And secondly, a sort of similar type of question, I guess. In terms of range optimisation, where are you in the sort of continuum of that? How much more have we got to come on range optimisation? And can you give us some sort of... colour on how maybe an optimised range has performed against some sort of control in terms of sales and profit per store.

Very good. So let me start with the London store. So effectively, we have two trial stores open. We have a third. So Tottenham Court Road, Fenchurch Street and Hoburn is opening in a couple of weeks time. Effectively, what we've done to what one of the great things about card factories, the disciplines that we've had in our. in our stores model. So maintaining the right build costs, the right rent structure, understanding the maturity curve, how to open stores and to get those returns within sort of roughly 18 months. We've never done London because of the confidence of being able to do that. So in terms of the trial, what we're doing is we're not kind of completely reinventing the model, but what we are doing is taking the model and just pushing the envelope on a number of different areas. So for example, Rents are slightly smaller in London, so that gives us a bit of confidence. We're then opening stores that are on the smaller side that we would normally open, so that slightly smaller square footage kind of keeps the rent down. We then need to push the average spend a little bit, so we're not... not putting our 29 pence cards into those trial stores but we've also put some additional products and pushed the exit price to 349 for example in order to get you know the average spend up so just by a little bit on rent a little bit on size a little bit on range a little bit on price uh our hypothesis says that we should have something that works in central london uh i mean the stores have been open for a number of weeks so we're we're testing a number of different things so we've got store on Fenchurch Street which is largely catered to the business population it's not open at weekends you know it's busy in the morning busy at lunch you know kind of busy at at five o'clock it would do better on Mondays and Fridays if you guys would all come back to the office that would really help that would really help help the sales so that's the kind of city type test then we've got Tottenham Court Road is kind of more on a bit of a shopping precinct and a thoroughfare between two tube stations. And then Hobart is a different thing again. So we're kind of testing those different things. We're looking at the maturity curve. Will that be the same, quicker, slower? So, you know, all of those things, but kind of really early days. But I'd encourage you, you know, to go have a look at the store and, you know, all feedback's welcome.

The point on range optimisation, I think, what is the optimum range? I mean, in fact, obviously, we do a lot of research into customer feedback and what customers are looking for. One of the areas we've mentioned is we know in terms of the card market, 1.4 billion, that is relatively static. In terms of the gifting market that we think we can play in, we've got the right to play in, it could be up to sort of 5 billion. So one of the things we're very much looking at is the proposition which can complement the card given occasion. So obviously that will help drive the average basket value, which is one of the points I touched on earlier on. And the other thing is actually on the complementary items, even though the percentage margin might be slightly lower, compared to card, then obviously in pound margin, it could be quite significantly higher off the higher price point. If the average card is near a pound, the complimentary gift could be three, four, five pounds. But that is a constant area that the commercial guys are constantly looking at how to optimise that, as well as using EPOS data in terms of stock turn and space utilisation in stores.

is still in process and maybe halfway through, third through, two-thirds, who knows? You know?

I don't think it ever finishes. I think range optimisation is a continuous piece. I think there is some catch-up work that we're doing, so all of the research that Chris talked about, kind of analysis, trialling new products, et cetera, but I think it never ends. I think it's just a continuous... How do you continuously evolve the range of... And how do you continuously, you know, customer preference changes is how do we do it? Through the research, we understood now that we have permission to play in a couple of categories that we've never done before. You know, confectionery came as a result of that. We tested some toys early last Christmas. They were very good. We got this slightly bigger buy this Christmas. Continue to see how it evolves and to continue to push the envelope.

Hard return though. Does the store make more profit at the end of the day? Bearing in mind the mix of the product, the lower margin mix.

Yeah, I mean, obviously, we mentioned opening a net new six stores this year. I mean, clearly, we've been asked a number of times, is that the right, you know, why are we opening more stores? And the ultimate fact of it is they make good money and return on investment is still attractive. Clearly, the bit we're doing on stores is making sure the relocations and making stores, the thousand stores are in the right places is equally important as any new stores. But yeah, like I say, one of the things on the complementary categories is that actually drives the pound margin. So actually helps actually drive the like for like sales growth.

Sales up, profit up, gross margin up a tiny bit. So I would say, you know, we're focused on, you know, that's our job is to drive more same store sales growth and drive more cash profit. I just wonder if we've got... We appear to have no questions online. Can we just have our operator do a reminder for our online folk, please?

Absolutely. Thank you, Darcy. Just as a reminder, if you'd like to ask a question and you're watching online, please raise your hand. We do, however, have one typed question from Massimo Antonello. He asks, can you please clarify what are approximately the normalised lease liability payments for the full year and for the next year? Thank you.

£40 million.

Next. Very specific question with a very specific answer.

There's no more raised hands, but do raise your hand if you'd like to ask a question online. Darcy, back to you in the room.

I think we... Looks like that... Looks like we're done. Unless there's anything else online, I don't think we need to drag it out. So just let me close up by all of you that joined us online, thank you very much. For everybody that's here in the room at UBS, thank you for making the effort. We'll kind of get some feedback whether the kind of hybrid thing works. And UBS, thanks for hosting us. Hope everybody has a great rest of the week and safe journeys wherever you may go. Thanks for attending today. Thank you.