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21.5.09

Clinton Cards PLC

('Clintons')

Administration of Birthdays Ltd ('Birthdays') and Group Interim Management Statement

Administration of Birthdays Ltd 

The Board of Clintons announces that it has taken the difficult decision that Clintons can no longer continue to provide funding to its loss making subsidiary Birthdays. As a consequence, the Birthdays' business was placed into administration and three Zolfo Cooper partners were appointed as Administrators of Birthdays on 20th May 2009. Birthdays' Irish subsidiary, Birthdays (Ireland) Limited, has not been placed into administration and will continue to trade as normal. All of the Clinton Card stores operated by Clintons are completely unaffected and will also continue to trade as normal. 

 

Clintons purchased the Birthdays' business in December 2004. Birthdays has continued to incur losses since that time and, although its sales performance has been improving, Clintons has had to continue to provide a significant amount of financial support. Given the current economic uncertainty and the structure of the Birthdays' business, the Clintons' Board believes there is little prospect of Birthdays generating a profit in the near future. 

 

Following deterioration in the wider economy since last autumn, approximately 50% of all Birthdays' stores are now loss making meaning that a solvent restructuring of the business is not considered to represent a viable solution.  The Clintons' Board therefore believes that placing the business into administration is the right course of action as the funding of the ongoing losses of Birthdays has become unsustainable. It has therefore acted now to protect the stable core Clintons' business as well as its shareholders, staff and suppliers.  Prior to placing Birthdays in administration, the Clintons' Board consulted with the Group's banks who confirmed their support for the Clintons' business going forward.

The 332 Birthdays' stores, employing approximately 2,100 people, will continue to trade as usual while the Administrators explore all options available to secure the future of the Birthdays' business.  Clintons will continue to provide support services to the Administrators to enable the business to operate as normal in the near term.  

Trading Update

In accordance with Clintons' stated policy to update the market with its quarterly sales performance, it reports that in the 13 week period from 2 February 2009 to 3 May 2009 like for like sales for the Clintons group (the 'Group') were flat. This comprised a slight decline of 0.6% for the Clinton brand and an increase of 2.3% for the Birthdays brand.

At 3 May 2009 Clintons was trading from 692 stores, employing approximately 6,200 staff, and Birthdays was trading from 332 stores employing approximately 2,100 staff.

Given the timing of the Birthdays administration, coming relatively close to year end, it will not have a material impact on the Group trading results for the 52 week period to 2 August 2009.  However the Group expects to incur a non-cash asset write-down of approximately £44m, including all intra group liabilities.  

  

Clinton Cards Chairman Don Lewin said:

'It is with deep regret that we have taken the decision to place the Birthdays' business into administration. Everyone at Birthdays has worked tirelessly to try and turn the business around and I would like to thank everybody for their hard work and dedication over the past 5 years.  Nevertheless in the current environment, the Group cannot sustain supporting losses of approximately £7m a year at Birthdays with limited opportunity to improve on that performance in the foreseeable future.

'Although this has been an extremely difficult decision it is my genuine belief that there is a significant element of the Birthdays' business that will have a profitable and sustainable future and there are still opportunities to make it a success.  

 

'It is sad that we have reached this position but this action will be earnings enhancing for Clintons and I have every confidence in the future of our business.'

-ENDS-

Enquiries:

Weber Shandwick Financial	020 7067 0700
Terry Garrett / Nick Dibden / James White / Katie Matthews

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