Card Factory boosts earnings forecast again as retailer shrugs off Royal Mail strike chaos in key Christmas period
- Card Factory expects to achieve at least £106m in annual underlying earnings
- Postal strikes and lack of Covid-19 restrictions hit the company’s online trade
- The firm’s everyday card and complementary ranges both performed strongly
Card Factory has raised its annual profit outlook for the second time in two months as customers returned to the retailer’s high street outlets in droves.
The greetings card and gifts seller now expects to achieve at least £106million in underlying earnings for the 12 months ending January, resulting in pre-tax profits of about £48million.
In November, the group increased its full-year core earnings guidance by £7.2million to £96.9million following better-than-anticipated trading volumes.
Upgrade: Card Factory now expects to achieve at least £106million in underlying earnings for the 12 months ending January, resulting in pre-tax profits of about £48million
Its performance has continued to recover well in recent months despite Royal Mail strikes over the key Christmas period hurting online sales.
Card Factory said sales benefited from the affordability of its festive seasonal ranges, as well as consumers buying more often and making larger orders.
This helped store revenue on a like-for-like basis expand by 7.1 per cent for the 11 months to December, as did healthy sales of the company’s complementary and everyday card offerings.
Double-digit sales growth was achieved across wedding, milestone, life moments, and children’s cards in the former category and impressive showings by confectionery and pocket money toys in the latter segment.
‘We’re pleased and encouraged by the continued strong performance of the business,’ said chief executive Darcy Willson-Rymer.
‘With delivery of our growth strategy progressing well, it is great to see some of the benefits from this work starting to come through in our financial performance.’
The Wakefield-based firm has bolstered its range, recently introducing gift experiences, alcohol, flowers and confectionery to the items sold on its website.
Even though online sales slumped by 27.6 per cent during the reported period, they have still soared by 85.2 per cent over the past three years due to significant growth at the height of coronavirus restrictions.
Because card and gift shops were classed as ‘non-essential’ by the UK Government, Card Factory was forced to shut its stores for much of 2020 and 2021, causing severe damage to its operations.
As a result, the group came close to breaching its banking covenants until it eventually agreed to a £225million refinancing package with lenders.
Card Factory shares had increased by 5.1 per cent to 91.6p, their highest point since May 2021, by the mid-afternoon on Tuesday, making it one of the top risers on the FTSE Small Cap Index.
Russ Mould, investment director at AJ Bell, said: ‘Card Factory has been on a roll for quite some time, suggesting that its value proposition is resonating with cash-strapped consumers.
‘When times are tough, sending a card and/or a small gift to someone can seem even more special than in ‘normal’ times.
‘Whereas someone like WH Smith may charge £3 or £4 for a greetings card, Card Factory offers them for a fraction of that price. Perhaps it doesn’t matter that the card quality is inferior; it’s the gesture of giving that matters.’