Card Factory warns on profits due to weak consumer environment and extreme weather in first half

Wakefield-headquartered Card Factory has issued a profit warning for the full year, blaming a weak consumer environment and extreme weather conditions earlier in the year.

The company reported total group sales growth of 3.2% in the first half of its financial year but said that like-for-like sales were down 0.2%.

However, with extreme weather conditions impacting high street footfall and continued consumer caution across the UK, like-for-like sales for the Card Factory store network fell by -0.7% (H1 FY18: +3.0%), with a marginal improvement in Q2.

The business said it delivered strong sales performances in its seasonal ranges, including a record Father’s Day for the group in both volume and value terms but that full-year underlying EBITDA is now expected to come in between £89m and £91m, dependent on the “key” fourth quarter trading period which includes Christmas. That is down on last year’s figure of £94m, which was itself a 4.6% drop from £98.5m in 2017.

In the first half Card Factory opened 25 new UK stores, bringing the total UK estate to 940 stores.

“We remain on track to deliver approximately 50 net new UK stores in the current financial year including a number of retail park stores, which continue to perform well,” the company said.

“We also opened one new store in the Republic of Ireland, meaning we now have a total of seven trial stores in the region. We continue to monitor performance and evolve our proposition as brand awareness improves.”

Karen Hubbard, Card Factory’s chief executive, said:”We continue to experience a weak consumer environment, made all the more challenging by the impact of this year’s extreme weather conditions on high street footfall.

“The performance of our seasonal ranges has been strong, with our best ever Father’s Day in terms of volume and value, although we recognise there has to be more focus on our Everyday ranges, which have lagged the seasonal performance.

“Taking into account the above, the board’s current expectation is that EBITDA for the year will be in the range of £89m to £91m. Our key Q4 trading period will of course be critical in determining the final result for the year, but we believe we are well positioned to deliver a good performance in our important Christmas trading season.”