Card Factory reinstates dividend

There is life in the high-street birthday cards model yet. Card Factory (CARD) shares rose by 7 per cent after the greeting cards and gifts retailer resumed dividend payments on the back of annual revenue and profit progress.

The vast majority of the company's revenue (94 per cent in the 2024 financial year) comes from physical Card Factory stores. Revenue growth was driven by an 8.7 per cent uplift in store sales, which was aided by the impact of 26 new sites opened in the year. Like-for-like growth was underpinned by price increases and “stable transaction volumes”. 

On the other hand, LFL online sales were flat after a challenging first half. But there was a vast improvement in the second six months of the year, where "ongoing investment in online capability, platform performance and customer experience" supported 11.4 per cent growth. 

Elsewhere, revenue at the small online Getting Personal brand (against which the company recorded an £1.1mn impairment charge) was down 31 per cent to £5.9mn. Third-party retail revenue more than tripled to £17mn on the acquisition of SA Greetings and new and expanded partnerships. 

The adjusted pre-tax profit margin was 12.2 per cent, up from 10.5 per cent in the prior year. 

Current trading is in line with management's forecasts and it pointed to "continued positive momentum". The company enjoyed a record trading day for the Saturday before Mother's Day, while online eponymous brand sales have now risen for five months in a row. 

Management reiterated its medium-term targets of £650mn in revenue, a pre-tax profit margin of 14 per cent and 90 net new stores by 2027. This set of results demonstrates progress towards these goals. But a rating of seven times forward consensus earnings is fair as things stand. Hold. 

Last IC view: Hold, 105p, 26 Sep 2023