The problem with closing stores, unless it is the end of the lease, you have to negotiate with the landlord. In the cureent market, they are not going to settle for much less than PV of rent to espiry, less say 10%. I used to do those deals - no landlords want vacant shops to let at the moment. |
 Card bull case is clear. Low valuation, strong management consistently executing, modest but promising growth catalysts via partnerships, etc. However, we need to stay mindful of downside scenarios and this is one to monitor in my view, as is the extensively discussed headwinds from the budget. WHS high street arm has been poorly managed - recent rebrands an example. If a well capitalised private owner get's its hands on this then there'll be some competitive pressures for sure. E.g. PE could leverage whs heritage more effectively, inject some efficiencies/reduce cost, pivot to a higher margin product mix, go aggressive on pricing, etc. PE is most likely suitor given the high street division wasn't current management's focus. PE will leap at the chance of flipping this. Risk is manageable but there's definitely some overlap between CARD store estate offering and whs high street estate.One to watch. Love the optimism on the board, which is of course well founded, but good to air possible downsides. |
If we had a proper Labour gov, they’d buy the stores and turn them into cheap accommodation.
Sorry I shouldn’t have used the word “cheap”. I believe its now offensive. |
The only times I have been into WHS in the last few years has been to queue for the post office but even that is pretty much redundant nowadays. Most won't even notice that they've gone and there will be a few more customers for Card Factory. |
Yeah, it's not an estate that screams longevity. Maybe some of the shopping-centre ones do okay, but the one on my high-street is always empty. I think they'll close most on traditional high-streets.
The budget effects will further consolidate the market in card's favour imo. It's time this business was recognised for what it's worth.
I also think they might just keep FP. |
Travel retail (i.e. railway stations and airports) makes 85% of WH smiths profits. They intend to open more stores in train stations, coach stations, bus stations etc. Given the low volumes and margins in the high street, which will get worse with the increase in minimum wage and employers NIC in April, it would not surprise me if WHS sell off or close all stores apart from Travel Retail (with or without a sale).Which, should be ok for card factory. It won't do wonders, but will provide extra traffic for the items that overlap between CARD and WHS. |
If they close their high street stores can only be a positive for Card surely. |
*all store closures |
Think store closures prob unlikely as retail biz is profitable. In the short term, card could benefit from ongoing disruption tho, esp as looks like there's store closures in the near term |
Think they'll close all stores if no buyers emerge. But most likely PE makes a bid. I suspect they'll adopt the classic PE playbook of getting rid of underperforming stores and waste, optimising high margin categories, etc. Interesting for sure. I was certainly wrong about card hitting full year expectations so could be wrong about PE being likely scenario! |
Good point on seeing what will be paid. Card is much stronger anyway so a premium would apply imo. |
I think they'll probably close all the stores on high-streets and keep the rest.
Not sure where I stand on FP. |
If the high street business goes to PE, then a leaner business could emerge and increase competition for CARD and others such as Waterstones. PE is most likely sale scenario in my view. Be great for card to eye up funky pigeon but likely to be package with store estate |
Wonder if funky pigeon will be included in sale? It's reported under their high street division. |
Omron
Where do you get the PE of 7.9 from?
I think it is 93.4/14 = 6.7 |
CF trading on a PE of 7.9x whilst SMWH is on 22.1x...sale process may help the Card share price. |
The rumoured sale of the WH Smith high street business (Mark Kleinmann Sky News) could prove a relevant comp for both Card Factory and The Works which are both trading on low multiples. |
Be greedy when others are fearful seems to apply here. |
Interesting that Paul Scott has finally bought into CARD. I don't know much about him but I know he has been negative on CARD since 30-40p range.
Ironic how much attention IGR got and the pushback I got when telling people there were redflags before the update. It seems like the typical emotional self-harm of investors in general endures: buy high and sell low. |
Notable absence of quite a few posters on both threads - always interesting to see. I wonder where they've gone next... |
Are there any company-specific or industry-wide issues which might explain the low p/e? Has there been a big seller? |
Not sure what other financial update you are expecting to see other than the trading statement - which confirmed inline with previous guidance - until issue of the Final Results at end April. |
Sorry i meant financial update ;-)... gl |
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