Birthdays to become more expensive as inflation raises card prices, according to Card Factory

Card Factory, which is a specialist retailer of greeting cards, gifts, wrap and bags, has announced its "robust" preliminary results for the year ended 31 January 2022.

The company said inflationary pressures have seen card prices already rising and higher price points are expected to last throughout the year.

The company revealed that its revenue increased by 28 per cent year on year to £364.4m, which it said was driven by a steady recovery in store performance following the easing of lockdown restrictions, alongside an online performance "significantly ahead" of pre-pandemic levels.

It achieved a profit before tax of £11.1m, which was ahead of management's expectations despite significant trading disruption and inflationary cost pressures, the statement said.

Card Factory said it had delivered on its strategic priorities, which included transitioning both online platforms - cardfactory.co.uk and gettingpersonal.co.uk - on to a single, unified platform, "unlocking cost benefits and opportunity to significantly expand the cardfactory.co.uk gifting range".

The company also opened its first new 'model store' as part of a wider trial, featuring improved customer flow and store navigation, and improved operational efficiencies.

Card Factory has also agreed terms on a refinancing with its current banking syndicate, extending debt facilities until September 2025.

The company said it has made good progress in using its positive cash flows to reduce overall debt and consequently has agreed revised terms on reduced facilities of £150 million

In a statement, Card Factory said: "Trading in the new financial year has been in line with our expectations and is contributing to a continued recovery of market share position. We are seeing some mix shift in our Spring seasons (Valentine's Day and Mother's Day) towards everyday ranges, which typically represent 70% of sales. Card range developments driving sales uplift in key ranges such as wedding.

"We expect our performance through the balance of the year to increasingly benefit from the strategic improvements we are making including expansion of complementary categories, further roll out of our trial model stores and highly targeted price increases.

"The board expects that the business will deliver revenue recovering towards pre-pandemic levels in FY23( full year 2023)."

"As previously guided in January, the board expects significant inflationary headwinds to continue through FY23. Pre-emptive action has already mitigated a significant proportion of the identified inflationary headwinds through a combination of efficient management of costs and working capital as well as targeted price increases."

"While taking into consideration the inflationary headwinds mentioned above as well as the levels of trading seen in the new financial year, the board's expectations for revenue and profit for FY23 remain unchanged.

"The board remains confident in the longer-term growth opportunity for the business and its expectations for revenues in excess of £600m in FY26."

Darcy Willson-Rymer, Chief Executive Officer, commented: "We are pleased to report a robust performance for the year, ahead of our original expectations, alongside good progress on our strategic transition, despite the operational challenges the last year brought.

"We saw a steady recovery in store performance as lockdown restrictions eased, particularly in the run up to Christmas with store sales approaching pre-pandemic levels in this key trading period. As we reopened our stores, we saw our online performance decline slightly year on year; however, we remain greatly encouraged that our Card Factory online sales were significantly ahead of pre-pandemic levels. This year will see us make further progress in developing our customer proposition, through a broader product range and improved online experience, as part of our transition to a leading omnichannel retailer.

"Looking forward, we remain confident our revenue levels for next year will continue trending towards pre-pandemic levels. We have taken pre-emptive action to help mitigate the inflationary pressures we are seeing across the business and we will continue to monitor and respond to developing macro environmental pressures. Our focus is on creating opportunities across our store estate while building out our wider capability which will allow us to deliver our strategic initiatives and drive growth at pace.

"We enter the year ahead with confidence in our ability to deliver our plan for FY23. We remain excited by the growth opportunity ahead and continue to focus on implementing changes to enable us to deliver on our transition from a store-led card retailer into a market leading, omnichannel retailer of cards and gifts."