- First-half results demonstrate appeal
- Background comment misconstrued
- Company positive ahead of festive period
Shares in greetings card and gift seller Card Factory (CARD) dropped after the firm posted strong first-half earnings but commentators focused instead on the firm’s comment regarding the ‘challenging economic backdrop’ ahead of the key Christmas period.
Having gained over 50% so far this year, the shares fell 8% to 102p on heavy volume as investors booked profits.
A STRONG FIRST HALF
In fairness to the group, the market reaction seems completely overdone given every firm which has reported results in the last couple of months has referenced the ‘challenging’ conditions for consumers given the increase in interest rates and the cost-of-living crisis.
If anything, Card Factory has been a beneficiary of the squeeze on household budgets thanks to its value and quality proposition as evidenced by its continued growth in sales and profits.
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For the six months to the end of July, revenue was up 11.5% to £221 million with greeting card sales up 7.7% and gift and celebration sales up 13.1%.
Revenue from existing partnership was up 23.5% to £4.2 million with recently-acquired SA Greetings adding a further £2.2 million of sales.
Pre-tax profit increased by £10.4 million or 72.7% to £24.7 million thanks to strong trading and price rises, while cash from operations jumped by £16.6 million or 84% to £36.3 million.
CONFIDENT OUTLOOK
The firm said its strong performance in the first half, helped by new store openings, the introduction of new products and refreshes of existing ranges, together with its outlook for the second half, meant it was ‘confident in delivering a good outturn for the year’.
‘Continued leveraging of the insights gathered from our investment in customer data is enabling us to evolve and optimise our store formats and ranges across cards, gifts and celebration essentials, all underpinned by our discipline in maintaining a resilient financial position’, added chief executive Darcy Wilson-Rymer.
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