Profit on the cards: Card Factory sees profits rise despite fall in like-for-like sales
Card Factory hailed a double digit rise in profit today as it was boosted by record sales for Valentine’s Day, Mother’s Day and Father’s Day.
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The high street retailer saw pre-tax profit grow 17.2 per cent year on year to £27.2m for the six months to the end of July.
Revenue grew 3.2 per cent to £185.3m despite a 0.2 per cent decline in like-for-like sales, thanks to Card Factory opening 25 new stores over the period, adding up to a total 940 branches.
Shares fell as much as nine per cent in early morning trading before climbing back as underlying operating profit dived almost 12 per cent to £24.5m.
Earnings per share grew 17.1 per cent to 6.38p, with the board planning to pay an interim dividend of 2.9p per share.
Why it’s interesting
Card Factory managed to bolster earnings despite reporting lower footfall on the high street, a common complaint among retailers this year, with Moss Bros blaming it for a £1.7m half-year loss last week.
But while everyday sales weakened, Card Factory found solace in improved commemorative day sales, with Valentine’s and Mother’s and Father’s Days lifting revenue.
Online sales accelerated by 85 per cent, and is on track to make a profit despite fierce digital competition from the likes of Moonpig, while the firm added more gifts and accessories to its in-store offerings.
Unlike many high street chains, Card Factory is expanding stores despite the downturn, opening seven trial stores in the Republic of Ireland, with plans to open 50 net new UK stores by the end of the year.
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What Card Factory said
Chief executive Karen Hubbard said:
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.
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.
We remain positive about the growth prospects for the business over the medium term.