Greetings Today magazine, giving you the bigger picture

Pressures see Card Factory profits drop

But more cards were sold as like-for-like sales increase and online arm sees 67% rise


CARD Factory have seen a drop in full-year profits after taking a £14.6million hit from the weak pound and soaring wage costs but actually sold more cards than in the previous 12 months.

The value greetings cards and gifts retailers posted a 12.3 per cent fall in pre-tax profits to £72.6m for their fiscal year ending January 31 as rising costs had an adverse impact on profit margins, although they expect pressures from the weak pound and living wage to ease in 2019/20.
Card Factory warned that earnings growth in the new financial year would also be “limited” thanks to on-going cost pressures, despite efforts to offset this with savings across the business, and follows their shares taking a hit in January after warnings over the impact of a margin squeeze on profits.
Despite this, on their £422.1m revenue – up from 2017’s £398.2m – like-for-like sales still managed to increase 2.9 per cent, according to the full-year report released today, Tuesday, April 10, compared to 0.6 per cent growth the previous financial year, while online sales at skyrocketed 67 per cent, although growth was “disappointing, but it remains a profitable contributor to the Group in a highly competitive gifting market”.
Chief executive Karen Hubbard said: “We sold more cards than the prior year, and delivered a higher average card selling price and total basket size. We also saw a record-breaking number of customers shopping with Card Factory for both card and complementary non-card products, demonstrating our resilience against a backdrop of High Street footfall decline.
“From a profit perspective, we faced strong headwinds of £14.6m in the year, principally due to the combined impact of foreign exchange and national living wage.
“Our cost-saving initiatives during the year provided substantial mitigation and we have laid the foundations for further efficiencies to be delivered in the future.
“However, given the continuing headwinds and, as previously stated, any EBITDA (underlying earnings), growth in full-year 2018-19 is likely to be limited.
“While the new financial year is just two months old, we are satisfied with the start we have made and particularly pleased with the record seasonal performances from Valentine’s Day, Mother’s Day and Easter, and being recognised by our peer group as Specialist Retailer Of The Year at the recent Retail Week annual awards.”
Card Factory opened 50 stores over the past year, taking their UK estate to 915, and added six trial shops in Ireland, and they plan to open more new outlets and continue to grow the online arm.

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