Sales growth at Card Factory but profitability suffers

Card Factory, the retailer of greeting cards and gifts, has seen an increase in overall revenue due to a “strong seasonal performance”.

For the six months ending June 31, the Wakefield-headquartered company reported a slight 3.2% rise in total revenue to £185.3m, compared to the £179.6m achieved in the previous year. Despite this, underlying pre-tax profit experienced a 13.9% drop from £26.3m last year to £22.7m. Underlying operating profit also dropped 11.6% to £24.5m.

While Card Factory’s revenue jumped 3.7% to £178.6m, the firm’s Getting Personal business saw a 8.5% drop in revenues from £7.3m to £6.7m.

Statutory pre-tax profits rose, with the listed company reporting a 17.2% increase to £27.2m.

Card Factory said the overall sales growth had been delivered from new store openings and also due to online growth of 85% from Cardfactory.co.uk, although Getting Personal continues to face a “challenging competitive environment.”

The high street stores were also affected by extreme weather conditions and continued consumer caution across the UK.

In the first half of the year, Card Factory opened 25 new UK stores, bringing the total UK estate to 940 stores as at 31 July, in addition to seven trial stores in the Republic of Ireland.

The company added that it remained on track to deliver around 50 new UK stores in the current financial year, having opened a further six new UK stores since the half year point.

Karen Hubbard, Chief Executive Officer, commented: “We have delivered solid interim results with overall sales growth, despite the weak consumer environment and particularly challenging footfall across the high street, driven by various factors. Profitability was impacted by lower like-for-like sales, but we continue to largely mitigate the headwinds we face through various business efficiencies.

“Despite this difficult consumer backdrop, we have seen record numbers for Valentine’s Day, Mother’s Day and Father’s Day both in terms of volume and value. This strong seasonal performance gives us confidence for the key Christmas trading period.

“Our business model remains highly cash generative and, further to previous guidance, we are pleased to be announcing another special dividend of 5.0 pence per share, which is consistent with our capital policy. Combined with a 2.9 pence per share interim dividend, this means we will have returned almost £300m to shareholders since our IPO in May 2014.

“As expected, trading in recent weeks has remained challenging given the weak consumer environment, but we have seen continued growth in average spend and improved performance of redesigned Everyday ranges. The Board is confident that the Group will continue to make further strategic progress on new initiatives.”

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