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Retailer Spotlight - The Card Factory sends mixed messages

 

Posted At: 11 October 2017 11:51 AM
Related Categories: Retailers

 

It’s been mixed messages from the Card Factory, as it opened its 900th store last week. Its Epping Forest Shopping Park store follows an aggressive roll-out programme for the high street chain, opening around 50 new stores every year in the last 10 years.

Falling shares make a lacklustre greeting

This milestone follows the budget card retailer’s disappointing interim results. Pre-tax profits tumbled by 14.1 % to £23.2m in the six months to July, despite sales rising 6.1% to £179.6m, in line with the company adding 30 new shops and extending its range of personalised gifts online.

The weaker pound, rising wage costs and decline in high street footfall have all been cited for contributing to the results. Chief executive, Karen Hubbard, also said that profitability over the half year was impacted by “some of the important investments we are making in the business for longer term growth.”

Customers first

The cut-price retailer, which opened its first store in Wakefield in 1997, has said that customer feedback is "profoundly anti" higher prices and told analysts that it was unable to pass on rising costs to shoppers. It currently sells cards at 29p, 59p and 99p each.

The company has promised to find ways to cut costs rather than raise prices. Karen Hubbard said, “Rather than putting prices up, we want to drive down costs of getting products to our stores.”

Looking ahead, this means Card Factory profits will continue to be squeezed, alongside tight cost-control measures.

A multichannel future

Despite falling profits, Card Factory increased its interim dividend by 3.6% to 2.9p and announced a £15.2m special dividend. This means a total £246.5m has been returned to investors since its stock market listing in 2014.

Card Factory has also confirmed plans to grow its online business - Website sales rose 30% last year, while its gettingpersonal.co.uk gifting business grew sales by 5%.

With high street footfall declining, and the fastest growing channel in the UK greetings card market being online, Card Factory is right to invest more in its multichannel offer. Analysts have commented that Card Factory has a way to go before it can compete with established players in the online personalisation card category, with Moonpig.com and WH Smith-owned funkypigeon.com key threats.

Card Factory employs around 6,500 people and also hires around 6,000 seasonal staff each year.
 

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