Card Factory (LON: CARD) have reported revenue gains in financial 2019, driven by increasing sales at new stores and increasing online sales.
The high street firm have had a mixed year, as they reported strong gains in quarterly sales back in June, but high street turbulence has hit.
There has been a national crisis on the British high street, where ever presents such as Marks and Spencer (LON: MKS) and Mothercare (LON: MTC) have fallen victim to slowing business and trading slumps.
In the nine months to 31 October revenue increased 5% as Card Factory grew its store numbers, with 38 new branches being opened in the same period.
However like-for-like in-store sales fell 0.4% in the three months to the end of October due to weaker footfall, which would have concerned shareholders.
The greetings card retailer should remain optimistic about the final few months of the year, as they prepare for the ever busy festive period.
The FTSE250 (INDEXFTSE: MCX) listed retailer reported increased online sales by 16.2 per cent and sales are up 21.9 per cent in the year to date.
“The tradition of sending Christmas cards by post seems to be in decline so Card Factory will have to push ancillary items more, such as wrapping paper, sticky tape and gift boxes, in order to keep driving up sales,” Russ Mould, investment director at AJ Bell said.
He added: “Fundamentally its prices are low and therefore attractive to a wide market but it has to work even harder each year to encourage people to buy its products, particularly as the market is already highly competitive.
“News that rival Clinton Cards is considering shop closures as part of a survival plan may provide a small benefit to Card Factory yet this is also an indication of how tough life is for many retailers.”
Card Factory is planning on launching a new platform and website later in 2019. Third-quarter online sales grew by 16%.
The company said it continues to face external cost pressures such as the UK’s national living wage, while year-to-date performance has also been hit by storage costs.
However, Card Factory have reassured stakeholders by saying that it expects these pressures to ease in financial 2020.
“I am pleased with our year-to-date performance. Our ongoing focus on customer experience, and the quality and range of our card and complementary non-card products, has led to an increased average spend both in stores and online. This has helped us to substantially offset the effect of the lower high street footfall experienced in the quarter and the corresponding impact on our like-for-like sales,” commented Chief Executive Karen Hubbard.
“We remain on track with our new store roll out and are focused on pursuing other new growth opportunities and retail partnerships to extend our market penetration in the UK and overseas.”
“Our quality/value proposition and new product ranges give us confidence that we are well positioned to deliver a good performance in our key fourth-quarter trading period. The board anticipates profit for the full year to be broadly in line with its previous expectations,” she continued.
Shares of Card Factory slumped 4.19% to 148p despite the positive update. 14/11/19 12:08BST.
