Card Factory Share Discussion Threads

[ukneonboy] 15/11/2019 09:52

In reply to StevieB2190 - post 1242 (dated 14 Nov 2019)

Your "negativity" towards Card Factory shares, suggests you've short-sold them and you are/were trying to talk the stock down.

Future rises in the UK's minimum wage will hit EVERY business, not just Card Factory.

And before you come back and say, I'm too ultra positive and too bullish about Card Factory shares, I basically see an "oversold" share with good growth prospects and with its major rival (Clintons) struggling.

[ukneonboy] 15/11/2019 09:41

well, rightly or wrongly (lol) my SIPP has today bought another 5,000 Card Factory shares at 159.36p each.

An absolute bargain, in my humble opinion

[ukneonboy] 14/11/2019 20:06

I'm buying more Card Factory shares now that the Q3 results have been released - I like the prospective dividend yield and the future growth potential.

If rival, Clintons goes into administration - its gonna be a boost to Card Factory profits for sure.

[fizzypop] 14/11/2019 15:50

Sentiment improving with a 6% rise from the day's low of 148p.
Much to look forward to with the 9th Jan 2020 TS as outlined above.

[wiseman1967] 14/11/2019 14:35

Continuing...- debt is consistent as a multiple of ebitda and so not growing or a big issue- the share price rise was for three main reasons: 1. A large special dividend and the share has now gone ex div. 2. New sales outlets at Aldi and Australia which are yet to start showing in the numbers as they are starting in November and January. 3. GBP strengthening improves the future fx cost of non card imports from Asia. The only explanation I can see for the drop is the c7p dividend.- sales are up 5% this year. How many retailers can say that? LFL ytd is +0.9% whilst -0.4% for the quarter against a high street footfall drop of -1.6% indicating they are performing above average.- the "low margin" mugs etc still achieve a gross margin of 50%. This may be lower than cards but ahead of many other retailers.Enough of talking down one of the great success stories of the high street!

[luderitz] 14/11/2019 14:28

When and I think it will be when and not if wages go up that simply means that a lot of people who buy cards will have more money to spend.

People with more money to spend is a good thing for the economy as card sellers will benefit just like most retail outlets and as already stated tons of times CARD's dividend is excellent in comparison.

[wiseman1967] 14/11/2019 14:25

There does seem to be a lot of scaremongering going on here.- the idea that a increase in minimum wage will wipe out profits is rubbish. Staff costs represent 25% of sales and not all staff will be pegged to the minimum wage. Higher minimum wages mean more cash in consumer pockets and so prices can be increased to offset it and given the 4x ratio between sales and wages a price increase of less than 25% will offset the NMW increase.- Peel Hunt did not get a position on the IPO (presumably because they didn't understand the business well enough) and have been negative since. (Even as share price rose from 225p to almost 400p)- I would agree that a CF and Clinton customer have a similar demographic profile and are probably quite close to the national demographic profile

[johnybigarms] 14/11/2019 14:04

When the minimum wage goes up, it effects every business, not just the card factory, and as mentioned before, everyone puts up the price of there goods to cover it, Clinton’s customers will still need to buy cards, and if a card factory store is local, they will get the business, Clinton going bust or at least reducing store numbers is the a huge benefit to us, online sales will increase year on year as the high street loses sales, I think at 8% plus dividend It’s a great place to park some funds. BUY

[meijiman] 14/11/2019 13:47

Thanks riverman. Re share price movements:much more volatility these days... up and down on no news. Old style jobbers used to pride themselves on doing share deals in large size and the price never changed.

[makinbuks] 14/11/2019 13:21

River, regarding your comment on a 15% drop, we are back to where we were 3 months ago so the shares had had a good run. The question is which is the anomaly? The rise over the last three months or the drop in the last couple of weeks? Nothing has really changed in the underlying business throughout the period.

[bbonsall] 14/11/2019 13:18

Stevieb
Just on one of your points.
If minimum wage goes up to £10, that's a £1.80 increase.
Card Factory profits are about £70 million.
You say that’s all CF profits gone!
Your statement would require CF to be employing 38 million people.
Plainly rubbish, so it is a shame such misleading claims can pass as facts.

[riverman77] 14/11/2019 13:11

I don't think there is any meaningful difference between Card Factory and Clinton customers (Clinton not sufficiently upmarket to attract a different demographic). The closure of Clinton stores will simply leave space for Card to move into.

In terms of minimum wage increases, this will eventually have to be be absorbed by increased prices. This is the case for all retailers - if people are earning more, and inflation increases, then shops will put up prices.

[bbonsall] 14/11/2019 12:59

It is Peel Hunt saying “Reduce” again today. They have said the same thing every month since May. They don’t show any signs of a thought process. Just robotic reiterations!
Surely, it is a positive that Card continues to grow in the face of the dire retail environment.

[meijiman] 14/11/2019 12:59

What is the difference between Card Factory and Clintons customer?

[stevieb2190] 14/11/2019 12:56

Its not all roses at card factory and the like for like sales on the core line is in decline..this is covered up with low margin extras such as mugs/glasses ect ect...whichever party gets in the minimum wage is set to sore and if it went to £10 thats cards profit wiped out..card will run out of places to expand and then then the truth will show...clintons will not affect then on anyway as a totally different customer...there are other issues such as debt which is slowly increasing despite being a cash business vertically integrated...watch out for xmas trading..my prediction..very pooe

[luderitz] 14/11/2019 11:57

Yes I agree with you both I can see nothing here to worry about.

[riverman77] 14/11/2019 11:50

Update doesn't look to bad, certainly nothing to justify a roughly 15% drop in just over a week. I also see decent growth potential, eg from the supply agreement with Aldi and other retailers, while the closure of Clinton stores is another positive.

[fizzypop] 14/11/2019 08:49

Reckon its topup time at 151p.
Paid 148.5p to double my holding.

[fizzypop] 14/11/2019 07:21

Q3 Trading update

Card Factory, the UK's leading specialist retailer of greeting cards, dressings and gifts, announces its trading update for the nine months ended 31 October 2019.

Key highlights

· Year-to-31 October 2019 ("YTD") Group revenue growth of +5.0% (2019: +3.4%)

· Overall YTD Card Factory like-for-like ("LFL") sales of +0.9% (2019: 0.0%)

· Continued store roll out driving additional revenue growth with twelve net new stores opened in the quarter; 38 net new UK and Republic of Ireland stores opened YTD

· On track to deliver approximately 50 net new UK and Republic of Ireland openings in the full year

· Card Factory website delivered YTD revenue growth of +21.9%, against a strong prior year performance (2019: +70.9%)

· The Board anticipates profits for the full year to be broadly in line with its previous expectations

* Comparator data set out in this announcement is for the nine months ended 31 October 2018

Recent trading performance

The Group has continued its robust sales performance, with a +5.0% increase in revenue for the nine months ended 31 October 2019 (2019: +3.4%), reflecting the contribution from new stores, CardFactory.co.uk growth and steady sales in a challenging UK high street environment.

Card Factory stores saw an increase in average spend, following the targeted improvements to our range of card and non-card products, but LFL sales were impacted by weaker footfall in the quarter and declined -0.4%. YTD Card Factory LFL store sales remain stable at +0.7%.

CardFactory.co.uk sales grew +16.2% in the third quarter against a tougher prior year comparative, as a result of the broader card, gift and party ranges, bringing YTD Card Factory website growth to +21.9%. Our new platform and website is expected to launch later this year.

Overall Card Factory LFL performance for the third quarter was -0.3% while LFL sales are up +0.9% for the nine months to 31 October 2019.

The business continues to face external cost pressures such as National Living Wage; with the year to date performance also impacted by increased storage costs, which we anticipate to substantially reduce in FY21. We continue to mitigate costs with our ongoing programme of business initiatives. The investment in the first half into the supply chain, operations and property management business efficiencies are expected to deliver savings in the second half of FY20.

Getting Personal was relaunched in the third quarter with a major restyling of the brand and imagery as part of the new strategy to target the more premium customer and improve performance.

Continued roll out of profitable new stores

Twelve net new stores, including four in the Republic of Ireland were opened in the third quarter, bringing YTD net new store openings in the UK and Republic of Ireland to 38. As a result, the total number of stores as at 31 October 2019 was 1,010 including eleven stores in Republic of Ireland. The business remains on track to deliver approximately 50 net new UK and Republic of Ireland stores in the current financial year and has a solid pipeline of new store opportunities for the next financial year.

Roll out of new retail partnerships

The roll out of Card Factory's new agreement with Aldi to supply half of their UK estate, totalling 440 stores, is anticipated to be completed by the end of November 2019. The Reject Shop roll out in Australia remains on track to commence in January 2020.

Financial position

The Group remains cash generative, driven by robust operating margins, limited working capital absorption and relatively low capital expenditure requirements.

As at 31 October 2019, net debt, before deduction of capitalised debt costs, totalled £171.2 million, excluding IFRS 16 lease liabilities (2019: £172.0 million). The £0.9 million increase since the FY20 interim results reflects the slightly earlier build-up of stock for the forthcoming Christmas trading period.

The 2.9 pence interim dividend and 5.0 pence special dividend announced on 24 September 2019, amounting in total to c. £27 million, will be paid to shareholders on 19 December 2019.

Christmas trading and preliminary results announcements

The Group will announce its preliminary results for the year ending 31 January 2020 on Tuesday 21 April 2020. In addition, a post-Christmas trading update is planned for 9 January 2020.

Karen Hubbard, Card Factory's Chief Executive Officer, said:

"I am pleased with our year-to-date performance. Our ongoing focus on customer experience, and the quality and range of our card and complementary non-card products, has led to an increased average spend both in stores and online. This has helped us to substantially offset the effect of the lower high street footfall experienced in the quarter and the corresponding impact on our like-for-like sales.

"We remain on track with our new store roll out and are focused on pursuing other new growth opportunities and retail partnerships to extend our market penetration in the UK and overseas.

"Our quality/value proposition and new product ranges give us confidence that we are well positioned to deliver a good performance in our key Q4 trading period. The Board anticipates profits for the full year to be broadly in line with its previous expectations."

[luderitz] 13/11/2019 17:27

I continue to have a good feeling now about CARD after their last big share price dive.

[bbonsall] 13/11/2019 16:24

Another thing. Card has just started selling in 400 Aldi stores at the beginning of this month. Can’t see what today’s markdown can possibly be prompted by. Only what I said earlier springs to mind.

[wiseman1967] 13/11/2019 16:02

Clintons may only be discussing 66 shops with landlords at the moment but the whole group went into administration seven years ago and part of it was rescued by American Greetings their main supplier. Since then private equity (Clayton Dubilier) has bought a majority of AG but chose to leave Clintons with the Weiss family - I suspect they will trade through Christmas but would not be surprised to see Clintons go into administration early next year. Don't forget that Card Factory is vertically integrated (design, print & retail) capturing the entire value chain, whilst Clinton's is just a retailer (in a load of high rent locations).

[minerve 2] 13/11/2019 15:45

Clintons is not going to close all stores. Forget that idea.

[russ1983] 13/11/2019 13:40

With its main competitor on the brink of collapse in surprised by falls to new lows so have topped up.

Imagine if Clinton's closed all 330+ stores many of them on the same street as card factory...

[fizzypop] 13/11/2019 12:15

Yield 9.4% @ 152p