Shares in budget greeting cards to gifts retailer Card Factory (CARD) rallied 12.7% to 65.9p on better than expected results for the year to January 2022 that revealed a return to profit and confirmed the group’s recovery is well underway.
There was also relief as Wakefield-headquartered Card Factory left sales and profit guidance for the new financial year unchanged despite inflationary headwinds.
The retailer said it expects to deliver revenue ‘recovering towards pre-pandemic levels’ this year and remains confident in generating revenue north of £600 million by 2026.
BACK IN THE BLACK
Card Factory experienced ‘improving momentum’ last year with sales up 28% to £364.4 million and the discount greeting cards, gifts, wrap and bags seller swung from losses of £16.4 million to pre-tax profits of £11.1 million, ahead of management expectations despite trading disruption and inflationary cost pressures.
As confirmed last month, a fundraise is no longer required and Card Factory has agreed new banking facilities extending to September 2025.
STEADY STORE RECOVERY
Card Factory’s encouraging results were driven by a steady recovery in store performance following the easing of lockdown restrictions alongside an online performance significantly ahead of pre-pandemic levels.
While online like-for-like sales softened 1.5% reflecting the easing of lockdown restrictions and the return of customers to physical stores, online like-for-likes were up 135% versus pre-pandemic 2020 reflecting an expanded online product range and the accelerated shift in consumer online shopping behaviours.
CEO Darcy Willson-Rymer said: ‘Looking forward, we remain confident our revenue levels for next year will continue trending towards pre-pandemic levels.
‘We have taken pre-emptive action to help mitigate the inflationary pressures we are seeing across the business and we will continue to monitor and respond to developing macro environmental pressures. Our focus is on creating opportunities across our store estate while building out our wider capability which will allow us to deliver our strategic initiatives and drive growth at pace.’
Willson-Rymer added: ‘We enter the year ahead with confidence in our ability to deliver our plan for financial year 2023.
‘We remain excited by the growth opportunity ahead and continue to focus on implementing changes to enable us to deliver on our transition from a store-led card retailer into a market leading, omnichannel retailer of cards and gifts.’
THE EXPERT’S VIEW
Russell Pointon, Director of Consumer at Edison, said Card Factory ‘anticipates key financial year 2023 strategic milestones to include expanding its market share in complementary categories, such as stationery, confectionary and toys, and completing the rollout of trial “model stores”.
‘It also plans to open its first Central London stores and continue its Republic of Ireland expansion as the group targets further growth.
‘With the board anticipating the widespread impact of inflation to continue, it has taking significant pre-emptive action including price increases as consumers are set to continue facing rising costs.
‘Looking ahead, the group’s strong recovery, as it has benefited from the end of lockdown, leaves it well placed to navigate current economic uncertainty and continue driving further growth.’
