Card Factory shares fall despite revenue lift

Shares of Wakefield-based greeting card and gift retailer Card Factory fell about 8% on Tuesday after it published results for the six months ended July 31, 2021, revised its long-term guidance and warned of “potential disruption from driver and labour shortages.”

First-half revenue rose 16.3% to £116.9 million and pre-tax loss narrowed to £6.5 million from £22.2 million a year earlier.

In its outlook, Card Factory said: “Notwithstanding short-term uncertainty around the speed of the market recovery the well-publicised disruption that is being seen in the supply chain, shortage of staff heading into Christmas, increasing freight costs, increased energy costs and adverse product mix, we remain cautiously positive about the second half of FY22.

“We have worked extensively to make sure we are as well prepared as possible for the forthcoming Christmas period to minimise the potential disruption from driver and labour shortages …

In the longer term we strongly believe in the resilience and stability of the card market, which is well insulated from market headwinds, and the potential for the group within the gifting segment, worth £40bn in the UK.”

On guidance, Card Factory said: “The group set long-term financial targets at the capital markets day in July 2020.

“Given the impact of the Covid-19 pandemic, and in particular the second and third UK lockdowns which were not envisaged at the time of the capital markets day, those targets are no longer valid and have been replaced.

“The new long-term guidance is as follows … revenues in excess of £600 million for FY26, of which the company expects approximately 20 per cent. to come from online & multi-channel and retail partnerships …

” … expected shift in product and channel mix, alongside investment to result in PBT margin trending towards 17% over the longer term.”

Card Factory CEO Darcy Willson-Rymer said: “Since joining the group one of my priorities has been to review the business and its growth strategy.

“Having recently completed that process, I remain extremely excited about the opportunities available to Card Factory.

“The delivery of the growth strategy set out in July 2020 — and the broader retail environment itself — has obviously been impacted by Covid-19.

“However, it is clear that the right way forward is to transition Card Factory from being a store led card retailer into a market leading, omni-channel retailer of cards and gifts.

“Whilst cards will remain the largest part of our business in terms of total contribution, we will substantially increase our focus on the complementary gifting and party markets, enhancing our customer offer and significantly increasing the size of our addressable market.”