Half-year cash profit of £32.5m at Card Factory (CARD) came in at the top end of market expectations, but - even better - the company has kept its word by returning excess cash to shareholders. Peel Hunt called the 15p special dividend a "major statement of intent" and dubbed the shares "a must-have" for income funds. The broker also reckons this will be the first special return of many, which implies a yield in the region of 6 per cent.
A bullish trading update in August already hinted at strong sales growth and, sure enough, Card Factory reported a 2.7 per cent increase in like-for-like sales for the half year. Gross margins lost 40 basis points, which chief executive Richard Hayes attributed to three factors: lower foreign exchange rates, a shift in the sales mix to lower-margin products, and the growth of the lower-margin online business. However, a number of cost savings made through property lease negotiations largely offset this.
Mr Hayes emphasised that Card Factory was not as reliant on festive trading as other retailers. Analysts at Peel Hunt expect pre-tax profit of £82.2m for the current financial year, giving EPS of 18.8p, up from £65.5m and 16.3p for the year ended January 2015.
| CARD FACTORY (CARD) | ||||
|---|---|---|---|---|
| ORD PRICE: | 355p | MARKET VALUE: | £1.21bn | |
| TOUCH: | 355-359p | 12-MONTH HIGH: | 390p | LOW: 210p |
| DIVIDEND YIELD: | 2.6%** | PE RATIO: | 19 | |
| NET ASSET VALUE: | 81p* | NET DEBT: | 39% | |
| Half-year to 31 Jul | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 149 | -7.9 | -2.2 | 0.0 |
| 2015 | 161 | 24.0 | 5.6 | 2.5 |
| % change | +8 | - | - | - |
Ex-div: 15 Oct Payment: 27 Nov *Includes intangible assets of £331m, or 97p a share **Does not include special dividend of 15p a share (to be paid alongside ordinary dividend) | ||||
