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Card Factory Plc

Card Factory Plc Growing sales despite a challenging consumer environment

Card Factory Plc (LON:CARD), the UK’s leading specialist retailer of greeting cards, dressings and gifts, today announced its interim results for the six months ended 31 July 2018.

Financial highlights

Financial Metric

H1 FY19

H1 FY18






Card Factory like-for-like sales*



(3.3 ppts)

Underlying EBITDA*




Underlying operating profit*




Operating profit




Underlying profit before tax*




Profit before tax




Underlying Basic EPS*

5.31 pence

6.19 pence


Basic EPS

6.38 pence

5.45 pence



1.76 x

     1.50 x

· The Board continues to expect underlying EBITDA for the full year to be in the range of £89m to £91m

· Interim dividend of 2.9 pence (FY18: 2.9 pence)

· Special dividend of 5.0 pence per share (FY18: 15.0 pence), a return of £17.1m to shareholders; consistent with our capital policy

· A total of £295.4m returned to shareholders via dividends since IPO in May 2014

* See explanatory Note 2 “Alternative Performance Measures” for further information and definitions

Business highlights

Strategic progress in a challenging consumer environment:

1. Like-for-like sales

· Overall H1 FY19 sales impacted by lower high street footfall in a weak consumer environment, leading to:

– Weaker sales of Everyday ranges, but;

– Strong seasonal performance; Valentine’s Day, Mother’s Day and Father’s Day ranges each delivered record sales; with

– Strong growth in sales from Card Factory online; and

– Further growth in average spend driven by continuing improvements to the quality and range of both card and complementary non-card products coupled with better utilisation of space in store.

· All stores on the new EPOS platform.

2. Continuing new store roll out

· 25 net new UK stores opened in the period, bringing total UK estate to 940.

· Seven trial stores in the Republic of Ireland, including one opened in the half year.

· Strong pipeline of new store opportunities – on track to deliver approximately 50 net new UK openings by the year end and solid pipeline for FY20.

3. Delivering business efficiencies

· Underlying EBITDA margin of 16.1% (H1 FY18: 18.3%) reflects like-for-like sales performance, the annualisation of prior year operational investment and cost headwinds – most notably foreign exchange and national living wage, amounting to a combined c.£4.0m – and the effect of business efficiencies delivered.

· On track to deliver planned business efficiencies for goods, supply chain, retail operations and property costs, with further efficiency initiatives planned going forward.

4. Development of complementary online sales channels

· Card Factory website delivered sales growth of c.85% and is on track to be profitable this year.

· Trading performance at Getting Personal remains challenging, with increased price competition and rising costs of customer acquisition impacting the business.

In addition, trials are underway to extend Card Factory’s market penetration, including:

· Retail partnerships: opportunities are being assessed and worked through with potential partners to offer Card Factory branded cards. One small trial is already underway.

· Franchising: one trial franchised unit will open in November 2018.

· Concessions: Two concession units opened this month with an additional four in the process of being fitted out.

Card Factory, Karen Hubbard, Chief Executive Officer, commented:

“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.

“Our business model remains highly cash generative and, further to previous guidance, we are pleased to be announcing another special dividend of 5.0 pence per share, which is consistent with our capital policy. Combined with a 2.9 pence per share interim dividend, this means we will have returned almost £300m to shareholders since our IPO in May 2014.

“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 Card Factory will continue to make further strategic progress on new initiatives.

“We remain positive about the growth prospects for the business over the medium term.”