Shares at Card Factory drop to all-time low

Shares at Wakefield-headquartered Card Factory dropped to its lowest yesterday after the stock market-listed firm issued a profit warning.

The firm blamed a weak consumer environment and extreme weather conditions earlier in the year which saw like-for-like sales down 0.2% although total group sales growth of 3.2% in the first half of its financial year.

Its share price fell 10% yesterday to 188p, its lowest close since the retailer floated in 2014. It is a long way from its 2015 peak when it touched 400p, while it traded around 350p as recently as last September. The one-day drop wiped £75m off the company’s market value, which now stands at around £640m.

Card Factory began with a single store in 1997 and listed in 2014 at 225p. Despite the issues it warned on yesterday, Card Factory said it was on track to open 50 stores for the full year and it was well positioned for a good performance in the Christmas trading season.

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 was 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.

Peel Hunt analysts said it was clear that management was expecting a tough H2 as well as everyday card volumes must be under severe pressure. They added: “new designs and improved store navigability are not resonating with customers it would seem.”