BUDGET greetings card manufacturer Card Factory reported a strong first quarter and said it is on track to open 50 new stores this year.
The Wakefield-based company, whose shares have rocketed since the firm floated last May, opened 19 new stores in the first quarter bringing its total estate to 783.
The retailer reported a 7.5 per cent rise in revenue in the three months to April 30 thanks to a combination of growth in like-for-like sales, new store openings and rapid expansion at its online business.
The growth represented a slight slowdown on the 8.5 per cent climb reported a year earlier, but was in line with growth in the half year to January 31.
The company said it won’t report like-for-like sales until its half year results in September, but said underlying sales are in line with management expectations.
Richard Hayes, chief executive of Card Factory, told shareholders at the group’s annual general meeting: “Following on from our record performance last year, we have had a positive start to our new financial year, with consistently strong revenue growth and cash generation and I remain confident that the group will achieve the board’s expectations for the full financial year.
“Our value retail proposition, built on our long-established vertically integrated model, remains highly differentiated, extremely difficult to replicate and, importantly, very attractive to the customer.“
Card Factory was valued at £766m when it floated on the London Stock Exchange last May and has since seen its market capitalisation increase by more than £380m, giving it a value of £1.15bn and making it one of Yorkshire’s 10 biggest listed companies.
Mr Hayes told investors that the group has developed its online proposition through the launch of a new Card Factory website.
“We are sure it will be well received by our customers who will benefit from its enhanced functionality and access to a greater product range,” he said.
The firm relaunched its Card Factory website at the end of April with a greater product range and aims to boost online revenues from a very small base.
The site runs alongside Card Factory’s main online arm, Getting Personal, which offers personalised cards and gifts.
Mr Hayes said Getting Personal performed well, building on its strong performance in the last two financial years although he warned that it will face more challenging comparative figures in the second half of the year.
The group said it remains highly cash generative.
At the end of April, before the forthcoming payment of the interim and proposed final dividends for 2015 totalling £23.2m, net debt fell to £91.9m.
Mr Hayes said the balance is significantly lower than the £103.6m reported at the end of January.
Any surplus capital within the business is likely to be returned to shareholders towards the end of the current financial year.
The group said a further announcement will be made alongside interim results for the six months to July 31 July, which are scheduled for September 22.
Analyst Kate Calvert at Investec said: “The first quarter trading update is in line with expectations, with like-for-like store sales growth reported “within management target range.
“Store openings remain on track, with a net new 19 stores in the first quarter, and around 50 for the full year.
“Our estimates suggest around 10 per cent of market cap could be returned in the next three years.”
Card Factory started in 1997 with just one store and it now has a nationwide presence.
The plan is to have a chain of 1,200 stores in total.
The company is seeing strong sales of new non-card ranges, such as candles, cushions, picture frames and ornaments.
Its market share rose one per cent last year to 17 per cent.
The company declared a full-year dividend of 6.8p per share.