Greetings card company Card Factory (CARD) has failed to push the envelope after sales growth slowed as fewer people visited its shops.
Revenue growth eased to 6.5% in the three months to 30 April 2016 from 7.5% a year earlier, resulting in softer like-for-like sales gains, although this was offset by a continuing rise in average spend.
Shares in the budget gift retailer slid 4.4% to 364.3p as it struggled to boost sales during a tough time for retailers. The number of people visiting the high street in April was 2.4% lower than in the same month a year earlier, figures from the British Retail Consortium (BRC) claims.
According to the Confederation of British Industry, retail sales in April 2016 fell at their fastest pace since January 2012, as retail, department stores and clothing sectors dragged sales down. While retail sales are picking up slightly in May, they are expected to fall in June as the EU referendum approaches.
The range of companies affected reveals how lower footfall can affect any company, regardless of it specialising in luxury or affordable goods.
Card Factory has generated strong cash flows driven by strong operating margins and limited working capital absorption, as well as low capital expenditure required for expansion.
The company reduced its debt to £110.4 million before the £800,000 deduction of capitalised debt costs, which is £13.4 million lower when compared to 31 January 2016.
Online revenues grew by more than 10% during the quarter, the result of the company’s new website.
Card Factory is currently targeting full year like-for-like sales growth within the five-year range of 1.4% to 3.2%.
The company has opened 20 new stores, bringing the total number to 834 as of 30 April. It remains on track to deliver 50 new outlets in the year to 31 January 2017.