Card Factory profits fall against ‘tough' consumer backdrop

The cards specialist reported an 7.3% downswing in underlying pre-tax profit to £74.6m in the year to January 31.

The retailer’s sales increased 3.3% year on year to £436.2m, spurred by new stores as like-for-like sales dipped 0.1%.

Card Factory opened a net 51 new stores during the period, taking its overall store estate to 972, and said it has a strong pipeline of store openings in the current financial year.

The cards specialist said it aimed to open over 1,200 stores across the UK and overseas “to drive profitable growth” following successful in-store trials with Aldi and an unnamed Australian retailer.

The retailer’s underlying EBITDA margin slipped 1.8% during the period to 20.5%, which Card Factory attributed to its flat like-for-like performance and cost headwinds.

The specialist retailer’s overall online sales increased 56.3% year on year.

However, the business’s Getting Personal online division reported a “disappointing” sales decline as increased customer acquisition costs compounded by promotional pricing “resulted in a substantial reduction in EBITDA”.

Card Factory said it expects EBITDA for the current financial year to be flat year on year.

Chief executive officer Karen Hubbard said: “We delivered a robust performance for the year, maintaining flat like-for-like sales despite a tough consumer environment.

“Our focus has been on continual improvements to our customer offer, producing better, more innovative ranges of everyday and seasonal cards and maintaining our quality and value positioning, while also being more efficient and driving savings across the business.

“EBITDA for the year, however, was impacted by lower footfall and Getting Personal’s disappointing performance.

“We continue to look to leverage our unique, vertically integrated model to improve our competitive advantage and drive margins. We have further initiatives planned for the current year which will bring further production back to the UK, while also implementing additional plans that will allow an improved focus on customer service in-store.

“Whilst the new financial year is just two months old, we are satisfied with the start we have made and are particularly pleased with record seasonal performances from Valentine’s Day and Mother’s Day.”