Shares in specialist retailer Card Factory (CARD) cheapened 1.4% to 40.4p on Tuesday after the Yorkshire-based company said it was unable to give an outlook for the 2021 financial year and reported a drop in profit for the year to January 2020.
However, the value-for-money greeting cards-to-gifts seller also signaled it would slowly reopen its brick and mortar stores and served up news of an encouraging online sales surge during lockdown.
PULLING UP THE SHUTTERS
Card Factory’s stores have been shuttered since March, but following recent government announcements the retailer plans to open 10% of its stores – around 90-to-100 outlets - from 15 June, while ensuring compliance with social distancing and welfare measures.
The retailer will take what it has learnt from these initial reopening trials before it rolls out future store openings in line with government guidance.
Since lockdown, Card Factory’s online sales have been incredibly strong. Like-for-like sales at cardfactory.co.uk surged 302% higher while gettingpersonal.co.uk enjoyed a 68% rise in sales.
‘In response to this increased demand and to support social distancing we have established a second fulfilment unit in Wakefield, leveraging existing capacity,’ said Card Factory, which has also seen solid sales through card range supply deals with both Aldi and Australian partner The Reject Shop.
NO GUIDANCE, NO DIVIDEND
Card Factory conceded ‘the COVID-19 pandemic has impacted trading and, given the uncertain economic backdrop, we do not think it is appropriate to provide financial guidance for full year 2021.
Having recently suspended last year's dividend, Card Factory does not expect to pay any dividends for the current financial year, and protecting the balance sheet during the crisis remains the priority.
Results for the year ended 31 January 2020 showed a disappointing 4.4% decline in pre-tax profit to £65.2m, while like-for-like sales softened 0.5% amid weak consumer confidence and a drop in high street footfall in the second half.
‘We delivered a reasonable sales performance in a challenging year for the high street, growing both our volume and value card market share in the mature and stable UK greeting card market,’ commented chief executive Karen Hubbard.
‘Our profitability was, however, impacted by a number of recurring cost pressures and other one off operational costs which we were not able to fully mitigate.’
THE LIBERUM VIEW
‘Plans to trial store openings from mid-June are encouraging,’ commented Liberum Capital, ‘while continued online momentum is also helpful. Putting aside the COVID-19 impact on full year 2021, Card Factory remains a good quality, vertically integrated, high margin and cash generative business.’