Card Factory plc (LON: CARD), the UK’s leading specialist retailer of greeting cards, dressings and gifts, provided today a trading update for the quarter ended 30 April 2019 to coincide with its Annual General Meeting to be held later today.
Key highlights
· First quarter total Group sales growth of +6.4%
· Card Factory like-for-like sales +2.3%
· Continued store roll out with 14 net new stores opened (Q1 FY19: 10)
· Strong cash generation
· Board’s expectations for the full financial year remain unchanged
Trading
Card Factory’s total and positive LFL sales performance represents an encouraging start to the year, although in part reflects the weakness in the comparator period. In the context of the continued challenging consumer environment, this performance illustrates the strength of our quality and value offer and the ongoing work to re-design and refresh products. Seasonal card and everyday non-card ranges performed well in the quarter.
The opening of 14 net new UK stores (Q1 FY19: 10) in the quarter brings the estate to 979 stores (including seven stores in the ROI). We remain on track to open approximately 50 net new stores in the current financial year. This includes a number of stores in the Republic of Ireland and on retail parks, in both of which our stores continue to perform well.
CardFactory.co.uk has had a good start to the year with continued revenue growth, driven by the success of new ranges and designs in both personalised and non-personalised products.
The trading performance at Getting Personal has continued to be impacted by a market environment of heavy discounting and increasing customer acquisition cost.
Financial position
The Group remains highly cash generative, driven by its strong operating margins, limited working capital absorption and relatively low capital expenditure requirements.
As at 30 April 2019, before the forthcoming payment of the proposed final dividend for FY19 of £21.9m (FY18: £21.9m), net debt was £151.3m (30 April 2018: £147.7m), each before the deduction of capitalised debt costs.
Outlook
Card Factory has seen a positive start to the year. Considering the uncertain macro outlook and the continuation of challenging consumer conditions, and with the key trading periods still to come, the Board expects LFL sales for the year to be marginally positive, with full year profit expectations remaining unchanged.
Karen Hubbard, Card Factory plc’s Chief Executive Officer, said:
“We have had a positive start to the year with like-for-like sales growth despite challenging consumer sentiment and negative footfall on the High Street. We have seen a good customer reaction to our seasonal card ranges over the quarter, with yet again record card sales in volumes and value for both Valentine’s Day and Mother’s Day. We continue to improve the range and quality of card and non-card options. Our store opening programme remains on track and we are pleased with the performance of recent openings.
“Overall, Card Factory remains in a strong position, continuing to grow market share, with lessening cost headwinds and a platform for medium term growth.”
