As we predicted, Card Factory (CARD) shares took a another tumble on release of these interim numbers. A like-for-like sales decline of 0.2 per cent bore stark contrast to the 3.1 per cent rise reported this time last year, while a special dividend of 5p came in at the lower end of expectations. Management has cited “weaker sales of everyday ranges”, as well as higher costs, most notably those linked to foreign exchange translations and the national living wage.
As broker Peel Hunt argues, there may have been worse performances on the British high street this year, but the usually defensive nature of Card Factory’s main products, as well as the ever-expanding store estate gives cause for concern. Half-year cash profits of £30m may have beaten analysts’ expectations, but the group’s ability to keep building market share and re-inject momentum into underlying sales growth remains open to question. In fact, a recent trial involving the provision of cards to supermarket chain Aldi has set some analysts’ teeth on edge, with Peel Hunt warning that it "runs a serious risk of cannibalising existing sales and reducing footfall to Card Factory stores".
For now, Peel Hunt still expects pre-tax profits of £74.5m for the year ending January 2019, giving EPS of 17.1p, down from £80.5m and 19p in FY2018.
| CARD FACTORY (CARD) | ||||
| ORD PRICE: | 180p | MARKET VALUE: | £614m | |
| TOUCH: | 179-180p | 12-MONTH HIGH: | 341p | LOW: 164p |
| DIVIDEND YIELD: | 5.2%* | PE RATIO: | 10 | |
| NET ASSET VALUE: | 539p** | NET DEBT: | 71% | |
| Half-year to 31 July | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 180 | 23.2 | 5.5 | 2.90 |
| 2018 | 185 | 27.2 | 6.4 | 2.90 |
| % change | +3 | +17 | +17 | - |
| Ex-div: | 08 Nov | |||
| Payment: | 14 Dec | |||
| *Excludes special dividends **Includes intangible assets of £332m, or 97p a share | ||||
