Sparks - Card Factory

Card Factory has reported good growth in revenue in H126, with management pointing to a challenging operating environment, while its profitability demonstrates its typically seasonality.

Overall, group revenue grew by 5.9%, including store revenue growth of 2.9%, within which like-for-like growth of 1.5% was lower than the more than 3% reported through FY25, alongside a strong performance from partnerships with double-digit organic growth. There was a notable decline in cardfactory.co.uk’s revenue of 11.3%, but this reflects management’s trimming of the product offer and focus on higher-margin sales that had been flagged previously.

From a profit perspective, adjusted EBITDA declined by 2.4% and adjusted PBT by 9%, affected by investments aimed at improving efficiency and significant cost inflation that most in the sector are facing, including the National Minimum Wage and national insurance contributions.

Despite the lower profitability, a significant reduction in working capital has driven a strong improvement in free cash flow.

With its peak trading period ahead, management reiterated its full-year guidance of mid-to-high single-digit growth in adjusted PBT, with the expanded celebrations offer and typical seasonality of sales to help on the revenue side, and efficiencies from recent and forthcoming investments to help on the cost side.

Management’s confidence in the outlook is highlighted by an increase in the interim dividend from 1.2p per share to 1.3p per share, and the start of a share buyback initially aimed at offsetting dilution from employee share awards.