£11.1m profit beats expectations as value retailer unveils “steady recovery” from pandemic
Card Factory is back with a bang, beating management expectations to post an £11.1million profit in final results released this morning (3 May 2022), against last year’s £16.4m loss.
In the specialist value greeting card retailer’s full year to 31 January, 2022, sales grew 28% on last year to £364.4m as the company said it had experienced “improving momentum” during the 12-month period, and a “steady recovery” in store performance since the easing of lockdown restrictions.
Stores sales grew 33% year-on-year, which Card Factory said reflected a 20% increase in the number of trading days against the shop closures suffered during lockdown the previous year, and store like-for-like sales for the Christmas season recovered to near to pre-pandemic levels.
However, like-for-like sales overall were 3.1% down on pre-pandemic levels, with online sales also dropping 1.5% on a like-for-like basis, although Card Factory said it was still “significantly ahead” of pre-Covid levels.
However, on a like-for-like basis against the FY2020, online sales surged 135%, which the retailer said reflected expansion of product range online and improved customer experience, as well as the accelerated shift in consumer online shopping behaviours.
Having taken pre-emptive action to mitigate a significant proportion of identified inflationary headwinds through a combination of efficient management of costs and working capital as well as targeted price increases, the board expects the business will deliver revenue recovering towards pre-pandemic levels in FY23, and remains confident in the longer-term growth opportunity, aiming to exceed revenues of £600m by 2026.
Plans are underway to move Cardfactory.co.uk and Gettingpersonal.co.uk on to a single, unified platform, which will unlock cost benefits and give the opportunity to significantly expand the gifting range – a chief information officer and digital director have been appoint, which the company said “recognises the critical role digital has to play in our business growth”.
While trading in the new financial year has been in line with the board’s expectations and is contributing to a continued recovery of market share position, the current cost of living crisis is kicking in with a mix shift over Valentine’s Day and Mother’s Day sales towards everyday ranges, which typically represent 70% of sales, however, card range developments are driving sales uplift in key ranges such as wedding.
Performance this current year is expected to increasingly benefit from the strategic improvements being made, including expansion of complementary categories, further roll out of the trial model stores – the first one has already opened in Coventry – and highly targeted price increases.
Card Factory’s chief executive officer Darcy Willson-Rymer commented: “We are pleased to report a robust performance for the year, ahead of our original expectations, alongside good progress on our strategic transition, despite the operational challenges the last year brought.
“We saw a steady recovery in store performance as lockdown restrictions eased, particularly in the run up to Christmas with store sales approaching pre-pandemic levels in this key trading period. As we reopened our stores, we saw our online performance decline slightly year on year, however, we remain greatly encouraged that our Card Factory online sales were significantly ahead of pre-pandemic levels. This year will see us make further progress in developing our customer proposition, through a broader product range and improved online experience, as part of our transition to a leading omnichannel retailer.
“Looking forward, we remain confident our revenue levels for next year will continue trending towards pre-pandemic levels. We have taken pre-emptive action to help mitigate the inflationary pressures we are seeing across the business and we will continue to monitor and respond to developing macro environmental pressures. Our focus is on creating opportunities across our store estate while building out our wider capability which will allow us to deliver our strategic initiatives and drive growth at pace.
“We enter the year ahead with confidence in our ability to deliver our plan for FY23. We remain excited by the growth opportunity ahead and continue to focus on implementing changes to enable us to deliver on our transition from a store-led card retailer into a market-leading, omnichannel retailer of cards and gifts.”
Top: New look – the first Model Store opened in Coventry
