# Card Factory increased average spend both in stores and online

- Link: https://www.directorstalkinterviews.com/card-factory-increased-average-spend-both-in-stores-and-online/412798058
- Published: 2019-11-14T07:46:37+00:00
- Author: Giles Arbor

**Card Factory** (LON: CARD), the UK’s leading specialist retailer of greeting cards,
dressings and gifts, announced its trading update for the nine months ended 31st
October 2019.

**Key highlights**

· Year-to-31 October 2019 (“YTD”) Group revenue growth of +5.0% (2019: +3.4%)

· Overall YTD Card Factory like-for-like (“LFL”) sales of +0.9% (2019: 0.0%)

· Continued store roll out driving additional revenue growth with twelve net new
stores opened in the quarter; 38 net new UK and Republic of Ireland stores opened
YTD

· On track to deliver approximately 50 net new UK and Republic of Ireland openings
in the full year

· Card Factory website delivered YTD revenue growth of +21.9%, against a strong 
prior year performance (2019: +70.9%)

· The Board anticipates profits for the full year to be broadly in line with its
previous expectation

. Comparator data set out in this announcement is for the nine months ended 31 October
2018

**Recent trading performance**

The Group has continued its robust sales performance, with a +5.0% increase in revenue
for the nine months ended 31 October 2019 (2019: +3.4%), reflecting the contribution
from new stores, CardFactory.co.uk growth and steady sales in a challenging UK high
street environment.

Card Factory stores saw an increase in average spend, following the targeted improvements
to our range of card and non-card products, but LFL sales were impacted by weaker
footfall in the quarter and declined -0.4%. YTD Card Factory LFL store sales remain
stable at +0.7%.

CardFactory.co.uk sales grew +16.2% in the third quarter against a tougher prior
year comparative, as a result of the broader card, gift and party ranges, bringing
YTD Card Factory website growth to +21.9%. Our new platform and website is expected
to launch later this year.

Overall Card Factory LFL performance for the third quarter was -0.3% while LFL sales
are up +0.9% for the nine months to 31 October 2019.

The business continues to face external cost pressures such as National Living Wage;
with the year to date performance also impacted by increased storage costs, which
we anticipate to substantially reduce in FY21. We continue to mitigate costs with
our ongoing programme of business initiatives. The investment in the first half 
into the supply chain, operations and property management business efficiencies 
are expected to deliver savings in the second half of FY20.

Getting Personal was relaunched in the third quarter with a major restyling of the
brand and imagery as part of the new strategy to target the more premium customer
and improve performance.

**Continued roll out of profitable new stores**

Twelve net new stores, including four in the Republic of Ireland were opened in 
the third quarter, bringing YTD net new store openings in the UK and Republic of
Ireland to 38. As a result, the total number of stores as at 31 October 2019 was
1,010 including eleven stores in Republic of Ireland. The business remains on track
to deliver approximately 50 net new UK and Republic of Ireland stores in the current
financial year and has a solid pipeline of new store opportunities for the next 
financial year.

**Roll out of new retail partnerships**

The roll out of Card Factory’s new agreement with Aldi to supply half of their UK
estate, totalling 440 stores, is anticipated to be completed by the end of November
2019. The Reject Shop roll out in Australia remains on track to commence in January
2020.

**Financial position**

The Group remains cash generative, driven by robust operating margins, limited working
capital absorption and relatively low capital expenditure requirements.

As at 31 October 2019, net debt, before deduction of capitalised debt costs, totalled
£171.2 million, excluding IFRS 16 lease liabilities (2019: £172.0 million). The 
£0.9 million increase since the FY20 interim results reflects the slightly earlier
build-up of stock for the forthcoming Christmas trading period.

The 2.9 pence interim dividend and 5.0 pence special dividend announced on 24 September
2019, amounting in total to c. £27 million, will be paid to shareholders on 19 December
2019.

**Christmas trading and preliminary results announcements**

The Group will announce its preliminary results for the year ending 31 January 2020
on Tuesday 21 April 2020. In addition, a post-Christmas trading update is planned
for 9 January 2020.

> **Karen Hubbard, Card Factory plc Chief Executive Officer, said:**
> “I am pleased with our year-to-date performance. Our ongoing focus on customer
> experience, and the quality and range of our card and complementary non-card products,
> has led to an increased average spend both in stores and online. This has helped
> us to substantially offset the effect of the lower high street footfall experienced
> in the quarter and the corresponding impact on our like-for-like sales.
> “We remain on track with our new store roll out and are focused on pursuing other
> new growth opportunities and retail partnerships to extend our market penetration
> in the UK and overseas.
> “Our quality/value proposition and new product ranges give us confidence that 
> we are well positioned to deliver a good performance in our key Q4 trading period.
> The Board anticipates profits for the full year to be broadly in line with its
> previous expectations.”

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