Card Factory Share Discussion Threads

[wiseman1967] 16/7/2020 17:33

TexasPete2 - their debt was gbp143m not gbp 289m (see page 28 of the accounts).The higher figure represents the capitalisation of their remaining shop leases and is offset by a new asset on the balance sheet - called right of use assets. It is a new accounting standard that was ill conceived and has clearly confused many investors. It may even be part of the reason for the share price performance - misunderstanding the real debt number. Pull out their latest accounts and you will see they show figures on both the old basis and under this ridiculous accounting standard (and I am a chartered accountant!). I admit that the real debt figure will have grown under Covid but nowhere near the figure that includes capitalised leases.

[wiseman1967] 16/7/2020 17:21

Dave0011 as you own six card shops and have been in the industry for 20 years I am surprised you don't understand the CF model. It is far from low margin as you put it. They design and print their own cards which is why they make a gross profit of over 75% on single greetings cards - the only other type of retailer that makes that kind of margins that I have come across is opticians. You may have to buy cards from wholesale suppliers which is probably why your margins are lower - your suppliers and printers have taken their share.I agree footfall is an issue for however long Covid lasts but the summer months are some of the quietest months in card retailing.

[mr_spock] 16/7/2020 16:42

dave0011...I agree the figures were trending down, but they were still nicely profitable. What may help now is the rents. Rents will have to come down, and CARD leases are shortish. Landlords have had their day. May take a while to come through, but I think CARD can benefit from this big time. Who wants a shop on the high street any more but the discount retailers like CARD, Wilko, B&M, The Works...think they will all be in a good position at negotiation time.

lastchance23...they did get carried away with the dividends. I'm neutral on CARD at the moment. Could go either way. The market may be shrinking slightly but they are taking a bigger share. If they can renegotiate some rents and close unprofitable stores then what's not to like?

[lastchance23] 16/7/2020 16:19

dave0011<< I don't trust third party information on these posts, its more for general insight in my own analysis, but I worked retail for JJB Sports, when you have 1000 shops only head office know what the FULL performance across all sites is, location is key, if you said leicester then obviously its in lockdown so won't be busy etc. But its only been a couple of weeks give people chance.

Mr Spock<< Some of the figures are distorted in terms of profit, they still made over 60m profit, they made errors dishing out too much dividends and specials in terms of debt, but they are benefiting from these interest rates and covid support, its a very REAL lifeline, and online growth of 300%+ is not to be sniffed at, give them chance, lets see who new CEO is and more info on their strategy first. If they grow online and reduce store to flagship key sites it will shift the business.

[dexdringle] 16/7/2020 16:13

"lastchance23 16 Jul '20 - 15:40 - 2582 of 2584

>>dexdringle I agree with your commentary on share price, but this is still on a relative basis cheap"
-----------------------

If they can get back to making £50 million a year net profit then, yes, a market cap of £150 million does look cheap. They could then pay out £20 million as dividends (7p a share) and reduce the debt by £30 million. All good.

But will they ever make £50 million profit again ? Has the world moved on and physical shop card retailers are no longer desirable ?

They have 1,000 outlets, thousands of staff, and a product / business model that is suddenly old hat and not desirable ?? (oh, and £300 million of debt).

I bought these at 90p and have been under water ever since. I don't expect ever to see 90p again...

[texaspete2] 16/7/2020 16:00

The debt of 289m is where this share also comes under pressure

[dave0011] 16/7/2020 15:53

Lastchance if you check back on my posts you'll find I have a relative is a manger at one of the branches, her footfall is currently down 59% other managers she knows are all well down too, like I also said I've been in card retail 20+ years, I own 6 card shops and the best performing is down 34%, so I speak with a fair bit of knowledge, however if you have more accurate information please share.
Mr Spock, actually I think you will find they were already starting to struggle before covid, figures are all there to be seen

[lastchance23] 16/7/2020 15:40

>>dexdringle I agree with your commentary on share price, but this is still on a relative basis cheap, if you look at a lot of shares they have been squeezed, the point is share prices can range 50% on a normal year, in this market 100%+. My view is that most stocks need to be traded and reduced regularly to get best price, it gets more complicated when you get to CGT, then you want things that don't move much but pay a dividend like Tesco, Sainsbury. But, in terms of masks, this is China's everyday normal life, it wouldn't be a worry their, the fact that all businesses now have to do this will cross promote the situation, its still early days give them chance.

[dexdringle] 16/7/2020 15:10

….other than the fact that no-one wants to go to shops anymore. More so with the governments latest stable door / horse strategy of wearing masks. Which will put people off rather than encourage (the 'can't be bothered to wear a mask" people will outnumber the "I'll go to a shop only if all the other shoppers wear masks" people). It is a disastrous decision (as well as being largely pointless - how many people have been catching Covid in Sainsburys ?)

As someone said yesterday, making the wearing of masks compulsory in shops now is like taking condoms to a baby shower.

[mr_spock] 16/7/2020 15:06

CARD were making a good profit before Covid. No reason they can't do the same after Covid.

[lastchance23] 16/7/2020 14:58

What is this a shorter's party??? CARD stock balloons and banners, would you like something personalised?

where are you getting your figures dave on this 40%??? Is it the same place Mallorca gets his fake liquidity information???

If you guys made an assessment of most retail stores it would be exactly the same, what would you say about gyms???

[greatwhitefunkmaster] 16/7/2020 14:52

Hmmm, not sure the comparison with Amazon is helpful. The whole point was that they killed bookshops, they didn't own hundreds and looked to grow them. I think that's the point.

[dave0011] 16/7/2020 14:49

I've been in greeting card retail for over 20years and like I've said all along Card factory in its current form is doomed, the whole concept is flawed in the current situation, they rely on large numbers of customers on small margins, they had already saturated the market place to a point where they're taking business from each others stores.

Footfall and takings are down approx 40% in the stores I know of, so unless there's a very dramatic change in direction or a huge cash boost I don't see where they survive.

[greatwhitefunkmaster] 16/7/2020 14:39

An excellent post Retailers benefiting currently if they are multi product. Card won't benefit from uptick in sales on COVID lines like some more nimble retailers. They are sat there, dying. Partnerships will last only as long as necessary for the other retailers to do it themselves.And longer term this is the Blockbuster of greeting cards.

[lastchance23] 16/7/2020 14:35

fenners66<< if your short on CARD your entitled to your opinion

I just backed up my viewpoint with examples of other successful online business models, there is no rule book on changing business model, Amazon started as a simple bookshop FFS. Obviously you feel they are chained to stores, but nothing is given in this leasehold market, and some store exposure (as even Amazon found) is useful for growing customers/marketing. Your online revenue forecast is based on what? UK market only??? I think they mentioned a GLOBAL STRATEGY moving forward, there's 7.8billion people on the planet, they are targeting not just individuals, but retail/wholesale through their in-house design centre. At the end of the day I think there is scope for a strong turnaround strategy, and you want to sell tickets to your short position. All retail companies are facing tough decisions, marks and spencer and Dixons are in similar omni-channel problems, but some will survive, and the ones that remain will benefit in the long run from less competition. CARD survived 2008, and todays interest rates are a gift, some companies that would of gone bust will survive due to this covid financing.

[fenners66] 16/7/2020 13:45

Best way of facing someone with the opposite view - is to back up yours with coherent researched points...

[fenners66] 16/7/2020 13:44

And Card were doing such a good job of online that they have only just written down the value of one of their online businesses.....

There has been online growth since , it may now get to break even ...

A large % online growth of such a small segment here is almost an irrelevance.

CARD chose to expand stores , without CV they would have circa 1100 now they are going to be seen as a liability I suspect.

Sure stores are open - but given the advice that there is a risk visiting them so much so that you have to wear a face mask , far fewer people are going in - because they do not have to. We do go to the supermarkets... but we can get birthday cards there as well.

The last CEO's message was all about getting people to impulse buy more cards.... now no one is impulse buying that message and her "reign" is over...

How many shops will now have to close , before they recover the set up costs of each?
That leaves debt as a legacy.

[lastchance23] 16/7/2020 12:29

monte1<< If you read through the full posts, you will notice I bought the dislocation at the key time and averaged out, It doesn't matter that my crystal ball didn't work on the entry timing, I recovered the position.

fenners66<< I was just trying to shut Mallorca up, the point is if this was store retail only it would be a concern, but the online growth has a business case by itself, one example is a company called banter cards they just do all social media promotion and have grown their business completely online with no stores, there is good money in cards, gifting, personalisation, just depends whether management have the right strategy. Card has the brand and proposition to adapt and do a bigger online business if they want; for that reason despite the current market, I think this will do well.

[fenners66] 16/7/2020 10:53

"lastchance23
16 Jul '20 - 10:08 - 2566 of 2569
CARD will adapt, omni-channel pal, they could close all stores and just run an online business if they wanted."


Can you give even the slightest hint of a financial justification for that comment.....

1000 stores to close and already a mountain of debt.....

[monte1] 16/7/2020 10:38

I note that the avatar ‘lastchance23&#8217;, who consistently logs very impressive freebb investment returns, has only ever posted on this one stock and their position here is not looking too clever,


lastchance23 - 09 Jan 2020 - 21:29:03 - 1577 of 2569
I was in 1.40 and 1.15, 1.08 after seeing director add. Yes paper loss, just going to be annoying logging in reminding yourself to hold for a while, until you can get out of position.

[lastchance23] 16/7/2020 10:27

Thomas Cook was a recovery trade I exited...FYI prior to pandemic I consistently averaged per quarter 10-30% return per holding on a 5 short/ 5 long portfolio; that's per quarter trading, not annualised return you could not achieve that. I took a hit with pandemic as I'm not an expert in Chinese cover ups, but I made back every penny within two months even though I had high exposure to oil, travel, retail. I trade value, because sooner or later valuation matters and catches up.

[mallorca 9] 16/7/2020 10:12

So your two big investments ....

Thomas Cook and Card factory lol

dear oh dear oh dear

Why don't you just hand your money over to me and miss out the middle man !!

[lastchance23] 16/7/2020 10:08

mallorca<< I haven't lost any money...

I know more than you pal, you don't know what I own or trade, I'm doing ok thanks.
The best dislocations are in omni channel retail and travel, I am doing well with all my positions. The only single trade I have cut a loss on was Thomas Cook, and everyone knows that was corrupt and a set up; and whilst it might of made you money, I believe it was pure luck, because only insiders knew that game.

CARD will adapt, omni-channel pal, they could close all stores and just run an online business if they wanted. I understand Card/gift market, birthdays, weddings, new babies etc, sentiment is resilient.