Challenging environment for Card Factory

'‹'‹Budget card retailer Card Factory reported a slowdown in like-for-like sales growth in the first half, blaming a challenging retail environment'‹ '‹and slower footfall.'‹ '‹

The Wakefield-based firm said it is too early to assess the impact of the EU referendum on consumer sentiment.

The Wakefield-based firm said ​it is too early to assess the impact of the EU referendum on consumer sentiment​, but it has entered the second half with confidence in the quality and​ ​value of ​its​ offer, including ​its​ new Christmas range​.​​ ​

The group reported like-for-like sales growth of just 0.2 per cent in the six months to July 31 while total sales, which includes new stores, rose 4.8 per cent.

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The firm is continuing its store roll out with 34 new stores opened over the period and it is confident it can deliver 50 new stores this year.

Karen Hubbard, Card Factory’s CEO, said: “The retail environment in the first half has been challenging and, as widely reported, footfall patterns in the first half have generally been soft.

“Card Factory is not immune to these wider factors and our sales growth over the period was lower than our normal levels as a result.

“Despite the near term challenges, Card Factory remains the clear market leader in the robust and resilient greetings card market with a strong value proposition.”

Analyst Jonathan Pritchard at Peel Hunt said: “Card Factory’s first half like-for-like showing of 0.2 per cent was rather underwhelming, but our view remains that the margin structure of the rest of the greetings cards industry is such that when industry conditions are irritating for the market leader, the pain will be excruciating elsewhere.

“We see store closures ahead across the industry (not at Card Factory of course).”

The firm​, which sells the majority of its cards for under £1, ​is proving popular with customers who are weary of paying steep mark ups on greetings cards​​. Many of its cards are priced at less than 50p at a time when the likes of WH Smith have been criticised for selling cards at £3 and £4.

The group has extended its product range into new ranges of candles, picture frames, cushions and doorstops.

Card Factory benefits from in-house design, printing and warehousing, which significantly reduces external costs and keeps the price down. ​​​It designs and manufactures cards in Yorkshire and also uses third party providers.​​

The group said that first quarter sales growth was softer than levels recently achieved and this trend continued in the second quarter, both in the lead up to and following the EU referendum. It said the wider impact of the Brexit vote remains uncertain.

It reported strong growth from the new website.