Card Factory (CARD) returned to like-for-like (LFL) growth in the first half of 2019, following a flat performance in 2018. The greetings card retailer overcame falling high-street footfall to deliver store LFL sales growth of 1.2 per cent. This rises to 1.5 per cent once growth in the online business is taken into account.
However, the group once again saw its earnings fall. Adjusted underlying cash profits were down 4 per cent due to cost increases relating to Brexit-related increases in stock holding and the continued roll-out of the national living wage.
The group found some success with signing up new retail partners. A trial with Aldi has been expanded to 440 stores – half of the supermarket’s UK estate – from 130 previously. It is seeking further partnerships and has signed a five-year agreement with Australian card retailer The Reject Shop. It is also trialling branded concessions across 15 Matalan stores.
Management insists it has seen “no evidence of cannibalisation to existing stores”. Indeed, the group opened 26 net new stores in the period and is on track for around 50 in the UK and Ireland by the end of the year.
Broker Peel Hunt is forecasting adjusted pre-tax profits of £72.2m for the full year, giving EPS of 16.9p. This is down from £74.6m and 17.6p in 2018.
| CARD FACTORY (CARD) | ||||
| ORD PRICE: | 165p | MARKET VALUE: | £563m | |
| TOUCH: | 165-165.8p | 12-MONTH HIGH: | 210p | LOW: 150p |
| DIVIDEND YIELD: | 5.6% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 65p* | NET DEBT: | 77%** | |
| Half-year to 31 Jul | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 185 | 28.4 | 6.7 | 2.90 |
| 2019*** | 196 | 24.3 | 5.7 | 2.90 |
| % change | +6 | -14 | -15 | - |
| Ex-div: | 7 Nov | |||
| Payment: | 19 Dec | |||
| *Includes intangible assets of £321m, or 94p a share **Excludes lease liabilities of £147m, ***Does not include the special dividend of 5p a share, to be paid alongside the interim dividend | ||||
