Card Factory saw its adjusted pre-tax profit fall 34.4% to £14.5m during the six months to 31 July after facing higher costs from freight inflation, the phasing of strategic investments, and increases in staff pay.
However, the card and gift retailer saw revenues increase by 5.9% to £233.8m after making positive progress with its growth strategy, which includes developing its store estate (15 openings) and offering its customers “quality and value”.
Like-for-like sales rose 3.7%, with gifts and celebration items performing well, up by 6% after Card Factory continued to expand its offering. However, sales of cards only rose 1.1%.
Meanwhile, online revenues increased 8.8% following investment in the customer experience and range development.
Chief Executive Darcy Willson-Rymer said: “I am delighted to be reporting further progress against our growth strategy with this resilient underlying performance in the first half of the year. We continue to deliver against our strategic priorities at pace thanks to the commitment and dedication of our colleagues.
“During the period, we continued to see strong performance across our growing store estate, with gifts and celebration essentials now a core driver of revenue growth, building on our strength in greetings cards.”
Card Factory stated it has been trading in line with the first half since the period end, with preparations for the key Christmas season well advanced.
Willson-Rymer added: “As we move into the second half of the year and the important Christmas trading period, our expectations for the full year are unchanged and we continue to focus on managing inflationary pressures within the business.
“Our strategic growth ambitions are underpinned by a robust balance sheet and strong cash flow, alongside our disciplined approach to managing working capital and focus on driving efficiencies and productivity across the business.”
Card Factory also revealed that it has signed a multi-year agreement with Aldi to become the exclusive greeting card supplier across the discounter’s full UK and Ireland store estate.
The retailer currently supplies 550 Aldi stores in the UK following its initial partnership agreed in 2019, which saw it launch in half of the discounter’s stores and share the supply contract with the IG Design Group.
The move forms part of Card Factory’s growth strategy to expand its physical presence across the UK. Last year, it began rolling out its concessions inside all of Matalan’s 223 branches following a successful trial.
NAM Implications:
- Retail concessions and gifting add-ons appear to be the way forward for Card Factory.
- With a combination of online & physical retail presence to drive the brand.
- Watch this space…
