The greetings card retailer grew revenue and cash generation in the first half, even as UK store footfall stayed soft.
Card Factory (LSE: CARD) said revenue climbed 5.3% to £260.8m in the six months to 31 July, as wholesale partnerships and the Funky Pigeon online business offset weaker UK store trading, with adjusted pre-tax profit broadly flat at £12.7m.
The retailer's shares have been watched closely by investors weighing consumer spending pressures against the group's diversification away from its traditional card shops, after like-for-like UK store sales fell 2% amid what management described as subdued consumer confidence and a hot summer that kept shoppers away from the high street.
Wholesale sales, sold through partners including Aldi and The Reject Shop, rose 14%, while Irish stores also grew strongly, helping to cushion the softer domestic store performance. Statutory pre-tax profit jumped 63% as one-off costs from the prior year fell away, and the company said disciplined working capital management had delivered positive free cash flow in the first half, an unusual outcome for a period that typically absorbs cash ahead of Christmas trading.
Chief executive Darcy Willson-Rymer said the group had made further progress building a 'broader, more diversified celebrations business', pointing to improved store profitability even as investment in digital and international operations weighed on margins. The interim dividend was raised 8%, a signal of management's confidence in the balance sheet despite the tougher UK backdrop.
Card Factory said it remains confident of meeting full-year expectations, citing strong plans for the 'golden quarter' of Christmas trading and pointing to a recent return to growth in UK store sales. Investors will now be watching whether that momentum holds through the crucial festive period, and whether wholesale and international growth can continue to offset any lingering weakness on the UK high street.
This report is based on Card Factory’s announcement and coverage by UK Investor Magazine. Company announcements can be tracked via London Stock Exchange RNS and Investegate, and the full markets calendar is worth watching for the next update.
This article is for general information only and does not constitute investment advice or a recommendation to buy or sell any security. Photo: Annie Spratt on Unsplash.
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