Card Factory boss Richard Hayes is attributing strong half-year sales and profit growth to the retailer’s “bricks-and-mortar store story”.

  • Card Factory is opening 50 stores a year
  • Only five stores last year were loss-making
  • Pre-tax profits grew 72.3% in the half

The greetings card specialist brought its store estate up to 800 as of July 31 and its aggressive expansion shows no sign of abating.

Hayes said: “The core element of the business remains the bricks-and-mortar store story. Historically we have opened 50 a year and our view is we should continue at that rate.

“One new store a week is quite an aggressive piece but we have been able to demonstrate we can do that with profitable stores.”

Clean portfolio

Hayes revealed only five stores were loss-making in the last financial year and described the estate as “a very clean portfolio”.

Card Factory expects new stores to be “making profit almost immediately” and looks for a return on investment in stores in the first 12 months.

Hayes believes Card Factory has such a strong bricks-and-mortar estate because of its vertically integrated model, which involves the retailer designing and producing its own cards.

Card Factory has increased its market share through opening stores and improving like-for-likes at existing outlets.

This morning it reported underlying profit before tax grew 72.3% to £25.7m, while revenues were up 8% to £161.4m for the half year ending July 31.

Facing headwinds

The retailer also warned it would face headwinds in its next financial year from foreign exchange and the new national living wage.

Hayes said how the company would absorb the higher wage costs was still under review and would not reveal how many of its staff currently earn less than the upcoming living wage.

He added: “The good thing for our business is we have relatively high profit margins, so we can withstand these things better than others.”

Card Factory’s results during the half took a slight hit, declining 40 basis points.

Hayes attributed this to a combination of reasons, including adverse exchange rates and growth at its Getting Personal gifts business, which has slightly lower profit margins.

Card Factory is expecting to be hit by exchange rates next year because it sources one third of its cards from the Far East.