Card Factory shares fall despite ‘robust’ sales

Shares of Wakefield-based greeting card and gift retailer Card Factory fell 5% on Tuesday after it said its second quarter was “a little weaker” despite total group sales growth of 5.5% in the first half of the year.

In a trading update for the six months ended July 31, 2019, Card Factory said its like-for-like sales rose 1.5% and called that “a robust sales performance in a challenging consumer environment.”

Card Factory said it still expects to return surplus cash to shareholders soon and it anticipates profits for the full year “to be broadly in line with its previous expectations.”

Analysts at Peel Hunt were skeptical, writing in a note: “Sales growth has slowed markedly in Q2, and card volumes must be down.

“This is the fundamental issue that Card Factory faces: this may not be a bad performance versus the wider market but volumes continue to struggle and there’s little to suggest that this trend will change. Ever.

“… We don’t think the special dividend is at risk, but longer term the structural concerns suggest that it may be a fleeting bit of solace for shareholders: Reduce.”

Card Factory CEO Karen Hubbard said: “Our quality and value proposition continues to resonate well with customers — reflected by the good performance of our seasonal ranges in the first half of the year. 

“We continue to work hard at making sure we have the right ranges at the right prices for our customers, in the store and online. 

“Alongside that, we remain focused on our important commercial and business efficiency initiatives — all of which will make Card Factory a much stronger business for the long term.

“We continue with the trials within Aldi and The Reject Shop in Australia, a further update will be given at our interims announcement in September.

“Looking forward to the forthcoming key Q4 trading period, which will have a significant impact on the outturn for the full year, we believe we have the right ranges and products to deliver a good performance; although, we are cognisant of the economic and political uncertainty and weaker consumer confidence. 

“The board anticipates profits for the full year to be broadly in line with its previous expectations.”

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Mark McSherry
Dalriada Media LLC sites are edited by veteran news journalist Mark McSherry, a former staff editor and reporter with Reuters, Bloomberg and major newspapers including the South China Morning Post, London's Sunday Times and The Scotsman. McSherry's journalism has also appeared in The Washington Post, The Guardian, The Independent, The New York Times, London's Evening Standard and Forbes. McSherry is also a professor of journalism and communication arts in universities and colleges in New York City. Scottish-born McSherry has an MBA from the University of Edinburgh and a Certificate in Global Affairs from New York University.