Happy returns for Card Factory

Card Factory said the market for greeting cards is resilient

The Wakefield-based company said like-for-like sales rose 0.6 per cent in the year to January 31, a fall from the previous year’s 3 per cent growth following lower levels of footfall in the retail market.

The group’s CEO Karen Hubbard said the new financial year has started well despite seasonal sales patterns being distorted by Easter and Mother’s Day falling three weeks later than last year.

“Our ranges continue to resonate well with our customers who recognise the quality and value that we offer,” she said.

“We are trusted to be there to help our customers celebrate their life moments and milestone events.

“We have the widest range of high quality cards, with innovative designs and styles, all available at compelling prices. Together, it means that our customers can find quality cards to say exactly what they wish to say at a price that is affordable for them.”

The group said the market for greeting cards is well established and resilient and is showing modest growth, supported by a growing and ageing population.

It believes that the sending of physical greeting cards is deeply ingrained in UK culture with high levels of emotional attachment to card purchasing. Meanwhile there has been no shift to digital greetings as a replacement for the physical card. However is believes the online personalised card market is an attractive niche that hasn’t been fully targeted by the group.

The firm said its stores saw like-for-like sales growth of 0.4 per cent, down from 2.8 per cent growth the previous year, following lower levels of footfall in the general retail market.

“I believe that we can do better and it was pleasing to deliver a good Christmas trading performance with cumulative like-for-like sales growth for the fourth quarter returning to the expected historic range of 1 to 3 per cent,” said Ms Hubbard.

“Customers can still buy high quality cards at prices that are up to two-thirds lower than that charged for similar products by our principal competitors.“

The group is also working on its gift range and has introduced a broader selection of wedding gifts, gift bags and boxes and new candle designs.

The group opened 51 new stores over the year in high streets, shopping centres and retail parks.

“The quality of our estate is quite remarkable,” said Ms Hubbard.

“Of our stores open for over one year, only five - less than 1 per cent of the estate - were loss making and their aggregate loss was only £100,000 at store contribution level.”

The group plans to open another 50 stores this year and is looking to increase its presence in retail parks.

Its long term goal is to have 1,200 stores in high streets, shopping centres and retail parks.

The group said it anticipates significant cost pressures, in particular foreign exchange and wage rates.

“Whilst our competitors are facing the same challenges, we have a competitive advantage by virtue of our vertically integrated model,” said Ms Hubbard.

“Our value proposition and our response to external challenges should present an opportunity to further strengthen our market position if we execute well. We will remain conscious of our customers’ sensitivity to price points.”

The group said annual revenue rose 4 per cent to £398m and underlying pre-tax profit was also up 4 per cent to £85m.

It increased the total ordinary dividend for the year by 7 per cent to 9.1p per share, reflecting confidence in the future. This is in addition to a 15.0p per share special dividend.