Sparks - Card Factory

Following the downgrade to expectations in the run up to Christmas, Card Factory’s recent trading update highlights that management expects to deliver revised guidance. The weak spot continues to be Card Factory’s stores. However, its international businesses are performing in line with expectations and the integration of Funky Pigeon is on track.

For November and December, the group delivered total revenue growth of 4.3%, which includes the benefit of M&A and the international businesses. At the store level, sales were weak with like-for-like declines of 1.2% and new store openings taking the total store sales decline to 0.8%. The weak consumer spending in December has recently been confirmed by the British Retail Consortium with non-food in-store sales declining by 0.5% and Barclaycard reporting a decline in consumer spending of 1.7%. The trading statement in December indicated the UK sales performance was volume related due to footfall and implied that average basket values had not been affected.

After a good start to the year, with 1.5% like-for-like growth in the stores in H126, the weaker performance in H226 has moderated the 11-month like-for-like growth to flat, and total revenue growth for the group is 7.3%.

Despite the lower-than-expected profit for the year, management has confirmed it anticipates declaring a progressive full-year dividend.