Shares jump as Clinton Cards clinches new loan deal

The deal overshadowed news Clinton Cards had decided not to pay an interim dividend, given what the company described today as challenging trading conditions and an uncertain outlook.

The group said it had extended its £72 million ($102.1 million) banking facility with Barclays and Royal Bank of Scotland to January 2012.

A scheduled repayment of £12 million, which had been due in November, would now be paid in three instalments, with £1 million due this December followed by £3 million in December 2010 and the final £8 million in December 2011.

Clinton Cards said interest payments under the new facility would be about 15% higher than under the previous agreement.

Altium analyst David Stoddart upgraded his recommendation on Clintons shares to 'hold' from 'sell' after the company also reported slightly better than expected first-half results.

"The financing issue has been resolved and H1 performance was robust," he wrote in a note to clients, raising his target price on shares in Clinton Cards to 10 pence from 7 pence.

Shares in the retailer, which had fallen more than 80% in the last 12 months, were up 24.4% at 12 pence this morning, valuing the group at about £25 million.

The retailer, which has over 1,000 stores trading under the Clinton Cards and Birthdays brands, posted a 46% fall in first-half pretax profit to £12.6 million from £23.3 million a year earlier.

Sales fell 5.2% to £243 million in the 26 weeks to 1 February, although the company said like-for-like sales had been flat in the 7 weeks to 22 March.

Finance Director Paul Salador told Reuters the group's sales had been supported by the collapse of competitors Woolworths and the Celebrations group, and the company would not be revising its full-year pretax profit forecast of £1.2 million.

He said visibility for the second half of the year remained uncertain given gloomy consumer sentiment.

"The customers coming into our stores are still spending what they were spending last year," he said in a telephone interview. "It is just the lack of footfall which has been the issue and that's something that is very difficult for us, as an individual retailer, to reverse."

Clintons has predicted cost savings of at least £2 million over the full year to July. Salador said the company had not made significant job cuts, in spite of initial plans to, and had instead reduced costs by decreasing the hours worked by staff.