Card Factory posts jump in profits but warns of 'challenging' run-up to Christmas

Card Factory shares slumped on Tuesday as the retailer posted a jump in first-half revenues and profits but warned of a "challenging" economic backdrop in the run-up to Christmas.

In the six months to 31 July, group revenue rose 11.5% on the same period a year earlier to £220.8m. This reflected continued good momentum across the business, particularly in the core stores segment, the company said.

Meanwhile, pre-tax profit rose by 72.7% to £24.7m, and adjusted pre-tax profit was up 104.6% to £22.1m.

Cardfactory like-for-like sales grew 10% during the half, while store revenue was up 10.5% on an LFL basis.

As expected, online LFL sales were down 13.1%. The retailer said this reflected the investment phase of this channel and the continued rebalancing of retail sales between online and in store across the sector.

Chief executive Darcy Willson-Rymer said: "Our value and quality proposition and the strength of our store estate resonates with customers and positions us well to navigate the challenging economic backdrop in the run up to the Christmas trading season.

"Continued leveraging of the insights gathered from our investment in customer data is enabling us to evolve and optimise our store formats and ranges across cards, gifts and celebration essentials, all underpinned by our discipline in maintaining a resilient financial position."

At 0915 BST, the shares were down 5.3% at 105.28p.

Russ Mould, investment director at AJ Bell, said: "Given the shares have more than doubled over the last 12 months, it’s perhaps no surprise to see investors taking stock after Card Factory’s first half results.

"The numbers themselves are impressive and show there is still a place for keenly priced greetings cards and gifts in the market, with the retrenchment of troubled rival Clintons Cards doing no harm at all to the company’s competitive position.

"A warning that tough Christmas conditions are in the post is the likely reason for today’s round of profit taking, even if the company sounds confident about navigating these challenges.

"To give the company its due credit it is also executing well on its growth strategy, moving into new markets and extending its reach through partnerships with other retailers and boosting its online footprint."