REPORTS that greetings card chain Card Factory is in the early stages of considering a bid for upmarket rival Paperchase have been dismissed by analysts as unlikely given the wide disparity between the two companies.
While Paperchase focuses on high-margin outlets, Wakefield-based Card Factory is focused on low-rent properties in a bid to keep costs down.
Analysts said that Card Factory would certainly baulk at the £150m asking price from Paperchase’s owner, private equity firm Primary Capital, which put the chain on the market last October.
Paperchase reported a three per cent increase in like-for-like sales over Christmas while total sales rose 6.5 per cent to £28.4m in the five weeks to December 27.
The group is understood to have received interest from a number of parties, both private equity and trade investors.
Analysts said that Paperchase would not fit particularly well with Card Factory which has over 750 stores already and plans to open up to 1,200, all at the value end of the market.
Card Factory declined to comment.
Earlier this month Card Factory reported a year of strong growth and said it plans to open around 50 new stores this year.
The group said like-for-like sales rose 1.8 per cent in the 11 months to December 31 despite tough comparatives with the previous year.
The firm said it is trading in line with expectations and high cash generation will result in a significant reduction in net debt at the year end to a level lower than currently expected.
It added that investment in localised pricing strategies is paying off and it will continue to adopt this approach to defend its market-leading position.
A total of 51 net new stores opened in the year to date, bringing the total estate to 764 stores as at the end of 2014.
The group reported strong growth in its online division Getting Personal, with double-digit revenue growth since the half-year stage.