Greetings Today magazine, giving you the bigger picture

‘Extreme’ weather blamed for share drop

Card Factory predict lower profits of £90m despite record Father’s Day sales

  

SHARES in Card Factory have fallen 10 per cent after they said weak consumer spending and "extreme" weather had caused a fall in sales and would mean lower profits.

Although total group sales growth increased by 3.2 per cent in the first half of their financial year, Card Factory’s like-for-like sales had fallen by 0.2 per cent, against 6.1 per cent and 3.1 per cent rises respectively a year ago.
The greetings retailers now expect underlying earnings to be between £89million and £91m this year, below analysts' expectations of £93.5m, but they are still intending to expand their 940-strong store network having already opened 25 new ones this year, plus one in Ireland, with plans for a further 25.
The good news from their latest trading update for the six months to July 31 was that Card Factory delivered strong sales performances in their seasonal ranges, including a record Father’s Day for the group in both volume and value terms, and they expect a good Christmas period.
Chief executive Karen Hubbard said: “We continue to experience a weak consumer environment, made all the more challenging by the impact of this year's extreme weather conditions on High Street footfall.
"The performance of our seasonal ranges has been strong, with our best-ever Father's Day in terms of volume and value, although we recognise there has to be more focus on our everyday ranges, which have lagged the seasonal performance.
“Our key fourth quarter trading period will, of course, be critical in determining the final result for the year, but we believe we are well positioned to deliver a good performance in our important Christmas trading season.”
Card Factory's shares were the biggest fallers in the FTSE 250 index, and were down 21.6p at 189.3p by early afternoon yesterday, Thursday, August 9, after the statement was released.
Within their store network, like-for-like sales were down 0.7 per cent, although there had been a “marginal improvement” in the second quarter, and on the Getting Personal website sales were down 8.5 per cent against a five per cent rise a year ago “in a highly price-competitive market”.
According to the BBC, analysts at Liberum said: “While the overall [like-for-like sales] performance for the [first half] is clearly disappointing, we note that in the wider context of the retail environment and reporting, this could have been worse.”
Card Factory’s shares have fallen twice in the past 12 months, in September when they reported lower first-half profits and again in January over concerns about higher wage costs and the weak pound.



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