‘Dif­fi­cult year’ ahead knocks Card Fac­tory

The Daily Telegraph - Business - - Focus On Retail - By Char­lie Tay­lor-Kroll

SHARES in Card Fac­tory tum­bled by 14pc yes­ter­day af­ter a “chal­leng­ing trad­ing pe­riod” prompted the greet­ings card re­tailer to warn it would en­dure “an­other dif­fi­cult year”.

The FTSE 250 re­tailer blamed lower high-street foot­fall for dwin­dling sales growth.

Like-for-like sales in the year to date had been broadly flat, dip­ping by 0.1pc, com­pared with growth of 3.8pc a year ear­lier.

To­tal sales rose by 3.4pc in the 11 months to Dec 31 com­pared with the same pe­riod in 2017. In fresh ev­i­dence of the shift of shop­pers to the in­ter­net, Card Fac­tory’s online card sales rose by 59pc in the last 11 months.

De­spite the sales rise, in­vestors balked at the com­pany warn­ing that “in light of the cur­rent con­sumer and macroe­co­nomic back­drop we an­tic­i­pate the ful­lyear 2020 will be an­other dif­fi­cult year”. Shares in Card Fac­tory closed down 26.6p at 168p yes­ter­day, valu­ing the com­pany at £574m.

“At first glance the Card Fac­tory Xmas up­date looked solid enough, but the devil was in the out­look state­ment,” said an­a­lysts at Peel Hunt.

“In gen­eral, we’ve got no prob­lem with man­age­ment teams be­ing cau­tious right now, but value greet­ings cards are a de­fen­sive pur­chase and there shouldn’t be a macro rea­son for cau­tion. The ar­eas of cost in­fla­tion have been known for a while,” they added.

Card Fac­tory said it also faces higher costs of be­tween £5m and £6m fol­low­ing in­creases in the na­tional liv­ing wage and higher elec­tric­ity charges.

De­spite the ad­di­tional costs Card Fac­tory still ex­pected an­nual prof­its be­fore tax and other charges to re­mains un­changed at be­tween £89m and £91m.

Karen Hubbard, chief ex­ec­u­tive, said: “Al­though the group has faced sig­nif­i­cant cost pres­sures in the year, these have re­duced and we have been able to take mit­i­gat­ing ac­tion to main­tain ro­bust gross mar­gins.”

Sales at the com­pany’s gift re­tailer, Get­ting Per­sonal, fell 8pc due to “heavy dis­count­ing and in­creas­ing costs of cus­tomer ac­qui­si­tions”.

Kate He­sel­tine, of Edi­son In­vest­ment Re­search, warned Card Fac­tory showed “lim­ited signs of any marked im­prove­ment in the sales trend over the fi­nal two months of 2018”.

De­spite the high-street cri­sis, the greet­ings card re­tailer has con­tin­ued ex­pand­ing its store port­fo­lio and opened 51 out­lets in the pe­riod.

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