Card Factory Share Discussion Threads

[wiseman1967] 14/8/2019 09:09

Hi smokybenchod. The usual action for a management team facing inflationary pressures such as the living wage is to increase prices. Often it is not possible to do so in a competitive environment. In this case CF pretty much dominates the value sector and given how cheap it is relative to its main competitors has scope to increase prices (not aggressively) to mitigate the cost inflation.

[wiseman1967] 14/8/2019 09:04

Really 1novice? You say their figures are not good? Show me another business with gross margins on its main product of 75% and ebitda margins of almost 25%, with little capex requirements and strong cash generation. It is still growing to boot! The only sector I have seen that comes close is optical retail. This is a vertically integrated business (design, print and retail) and so outperforms any publisher or retailer in this segment. I agree with you that a buyout may be possible given current valuations around 7.5x ebitda (that would be good for shareholders). My moniker is tongue in cheek but your comment about a CVA is far from the mark and suggests yours may be more accurate.

[woodhawk] 14/8/2019 08:36

That's all you deserve.

[smokybenchod] 14/8/2019 08:36

And you spent even less on that childish post. Good day sir and best of luck.

[woodhawk] 14/8/2019 08:34

"An alternative view". LOL, you obviously spent all of 5 seconds on that drivel, you Johnny-come-lately.

[smokybenchod] 14/8/2019 08:26

Hi wiseman,

Whilst point 2 should reverse, you have to ask yourself what actions are management taking to address point 1 long term. I previously suggested limited self-checkout in certain stores which would certainly help. Not drivel and not a Jonny come lately woodhawk just an alternative view which is the whole point of forums.

We’ll let the market decide if the shares are good value.

[1novice] 14/8/2019 08:20

Having worked in this industry for many years as a publisher and retailer their figures ain't good. Only thing propping the share price up is the divi. Like for like sales poor, way too many shops. Either a buyout or CVA is coming

[simba_] 14/8/2019 07:22

Where does the huge amount of goodwill on the bs come from here?. I remember looking at this a while back and was struck by that amount.

[luderitz] 14/8/2019 07:11

Lots made of the dept but with very low interest rates that I don't see changing any time soon I personally don't think it is a problem.

How many other retail outlets are opening new shops in this country on a yearly basis? not many I would think yet CARD are, so I think they can only go from strength to strength.

[garycook] 14/8/2019 02:52

If the full year dividend is maintained with the Special,which as basically been stated in the Trading statement at say 14.30p,then CARD is yielding around 9.15% at 156.20p.It remains the Board's policy to return surplus cash to shareholders. As outlined in the preliminary results announcement, a further return of surplus cash is expected to be made towards the end of the FY20 financial year. We will provide confirmation as to the quantum and timing of the next distribution at the time of our interim results announcement for the six months ended 31 July 2019, due for release on Tuesday 24 September 2019.Also Peel Hunt not helping here giving CARD bad reviews.When UBS gives a 230p PT. 09 Aug UBS Buy 230.00 - Upgrades

[wiseman1967] 13/8/2019 20:15

Thanks Woodhawk. I have a decent amount invested and have followed CF for many years. The business is not well understood either by the City or more widely. The profits are sensitive to the usd/gbp rate, but greeting cards are not discretionary like many items - just try not buying your spouse a birthday/Valentine/anniversary card...at this price the shares feel good value. I am just trying to tell others. However, I am equally happy averaging in!

[woodhawk] 13/8/2019 19:33

Excellent posts Wiseman1967 - lots to consider there - unlike the vacuuous drivel posted by most of the cliched Johnny-come-latelys. I only have a small holding in CARD and am minded to sit out the Woodford effect and collect the divis.

[wiseman1967] 13/8/2019 18:52

Hi Salpara111. The RNS on 6 June shows Woodford sold down from 8.94% to less than 5%. I don't know where he started but I suspect most of what you call "the Woodford effect" is now in the price.

[wiseman1967] 13/8/2019 18:42

Hi Smokybenchod. The new store opening programme is massively accretive. Based on last years accounts (excl online), avg sales per store are c£450k, aim off this for stores they are currently opening, so £400k. At 25% ebitda/contribution this is £100k per new store. Apply a multiple - you choose 7x-10x. This means each new store adds £700k-£1m of value - against £50-60k capex. That is massively accretive in my view. The profits are down (not by much) over the last two years for two reasons: 1. Minimum/living wage increases which is likely a permanent cost increase. 2. GBP/USD exchange rate - assume purchases of $100m, the move from 1.60 to 1.20 in Fx rate would hit profits for c£21m. In my view this will reverse, you may take a different view. I think the shares are even better value than their cards!

[salpara111] 13/8/2019 15:03

Wasnt a disaster but not quite as good as I had been hoping for either.
I am more inclined to stay on the sidelines on the back of this update and as mentioned before there is the "woodford effect" still to play out.

[smokybenchod] 13/8/2019 14:05

Debt isn’t the main issue for me. It’s the fact that they are adding 50 stores every year and profits are going down. Running, not even to stand still, rather going in reverse. Once they reach store saturation, unless they drastically innovate and also reduce costs and improve margins, the business will start shrinking at a rapid rate.

[wiseman1967] 13/8/2019 13:47

StevieB - debt of between 1.5-2.0x is NOT horrendous when you have such a cash generative business. This is especially the case when capex is so light. They have opened 50 stores a year for the last 20 years - capex for new stores is less than £3m, older stores will be on a typical 7 year refresh cycle for retailers.

[wiseman1967] 13/8/2019 13:43

Also Getting Personal represented only 4% of sales last year (and less in terms of profits) so a 10% fall in GP sales should not materially impact the total group.

[wiseman1967] 13/8/2019 13:11

Has anyone heard of seasonality? Stock is lowest in Jan after Xmas so cash will be highest / debt lowest then. Stocks then build through the year, increasing debt. So even if debt appears the same it is actually lower once adjusted for working capital.

[stardog2] 13/8/2019 11:30

Another way to look at it is that relative to the size of the business debt is at a similar level to this point last year. There are 6 percent more shops than last year, sales are 5.5 percent higher and debt is 5.9 percent higher.

[stevieb2190] 13/8/2019 11:24

Which ever way you cut it each store owes an average in excess of £170000 and that is HORRENDOUS...Brexit stockpiling is just an excuse..they are a cash business and simply should not owe that much...the debt pile is heading in one direction...how can you give so called surplus cash to shareholders..there is no surplus cash

[stevieb2190] 13/8/2019 11:24

Which ever way you cut it each store owes an average in excess of £170000 and that is HORRENDOUS...Brexit stockpiling is just an excuse..they are a cash business and simply should not owe that much...the debt pile is heading in one direction...how can you give so called surplus cash to shareholders..there is no surplus cash

[gswredland] 13/8/2019 09:40

Woodford won’t be helping here either

[scobak] 13/8/2019 09:40

£11 million in wrong direction but the tradstat is noticeably bullish and debt is glossed over.

[renewed1] 13/8/2019 09:22

The hope was that the debt pile would start to reduce...doesnt seem to be happening!!