Sparks - Card Factory

Card Factory has issued a reassuring trading update, indicating that management’s expectations for full-year adjusted PBT are unchanged. The negative share price reaction following the interim results suggested a high level of scepticism about the profit outlook. Therefore, the delivery of good sales growth, which shows the strategy continues to work, as well as the promised productivity and efficiency savings, should be welcomed by the market.

From a revenue perspective, there was good growth in stores and from Partnerships, helped by contributions from M&A but online was weak. Store like-for-like revenue growth of 3.9% in the first 11 months was driven by gifts and celebration essentials, which grew by 6.1%, as well as by cards, which grew by 1.4%. For the Christmas period, management indicated that trading was in line with expectations, supported by the strength of the seasonal offer.

Management has quantified the changes to the National Living Wage and Employer National Insurance Contribution will lead to cost inflation of c £14m in FY26 that will be offset by range development and pricing, as well as productivity savings. As a result, management indicates growth in adjusted PBT in the mid-to-high single-digit percentage range next year.