Profit warning for High Street retailer after ‘challenging’ Christmas
Card Factory endured a “challenging” Christmas that it believes points to “adverse external factors” which will affect its profits this year and next.
The Wakefield-headquartered retailer had expected profits in the year to January to be broadly flat, but has today revealed that they could be down by as much as 10%.
And it now expects that in 12 months’ time it will be confirming a fourth successive annual fall in profits – to around £70m-£75m, compared with 2017’s high of £98.5m.
Card Factory’s share price has also been in decline over that period, with last night’s close of 140p being 60% lower than its level in September 2017.
A management review is underway and it expects to present its refreshed strategy to investors in three months’ time.
Card Factory’s chief executive Karen Hubbard said: “We plan to invest further in the business, enhancing our ability to operate more efficiently, service new sales channels and increase our competitive advantage, enabling a return to profit growth after the next financial year.”
Like-for-like sales for the first nine months of the year were up 0.9%, but just two months later the year-to-date figure had dropped to -0.6%, highlighting the importance of the Christmas period on annual sales and the recent problems on the high street.
The retailer has, however, still been able to grow its group revenues by 3.6%. Its store opening programme will meet its target of adding 50 stores in the current financial year, which has taken its total number above 1,000.
It has also rolled out a card range in all 440 Aldi stores while starting a trial in 15 Matalan stores, and its online business has increased revenues by 15%.
Hubbard added: “The Christmas trading period continued to be challenging given the general election and weak consumer confidence, the impact of which can be seen in the footfall decline experienced in the period.
“Our investment in our customer experience, operational efficiency and data to improve our ranges has helped us to mitigate some of the effects of the tougher retail environment and higher costs experienced in the year.
