Despite wider concerns in the retail sector, Card Factory (LON:CARDC) has had an impressive year market-wise, climbing an astounding 37.5% and recently hitting a 15 month high of £3.49. The stock’s only real dip came across June and the first half of July, as a string of worrying inflation, wage growth and retail sales figures – alongside the uncertainty of the UK general election – weighed on the market as a whole. Card Factory PLC now sits at a current trading price of £3.45
By and large the company’s various updates have supported its rather robust rise, though there were a few issues at the start of the year. Card Factory’s annual report at the end of March – following a relatively disappointing, but well-received Christmas statement in January – saw the company reveal a 1.1% fall in pre-tax profit to £82.8 million alongside a meagre 0.4% increase in like-for-like sales.
Total sales, however, were up 4.3% after the firm opened 51 new stores during the financial year. More importantly Card Factory hiked its total dividend by 7.1% to 9.1p per share, following on from the special 15p dividend paid the previous November.
Things further improved in May, as Card Factory stated that its first quarter comparable sales were at the upper end of its 1% to 3% targeted range, with underlying group sales surging 6.1%. It also, crucially, claimed that it will likely make ‘a further return of surplus cash to shareholders’ before the end of its financial 2017.
The company’s most recent update came in early August. For the half year like-for-likes rose by 3.1%, with total sales up 6% thanks to cutting the ribbon on 30 new stores. It also confirmed its first tentative steps into the Republic of Ireland, with a trial store opening in July set to be followed by a few more locations later in the year.
In terms of next Tuesday’s interim statement, investors will want to see this uptick in sales translate into an improvement in pre-tax profit following the full year fall revealed in March. They can also expect an update on the aforementioned return of that surplus cash, something that may come to overshadow any of the other figures released.
Card Factory PLC has a consensus rating of ‘Buy’ with an average target price of £4.00.
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