What message will be written on the inside of Card Factory’s interim results this Tuesday?
It’s been a year of commiserations rather than celebrations for the high street retailer. Starting at £3.01 the stock plunged below £2 by the end of January, a price it couldn’t substantially rally back above until late April, where it managed to climb to £2.50.
Those gains didn’t last for long, however, and since then the stock has been almost permanently on the back foot. Having hit an all-time nadir of £1.75 in mid-August the company has seen a negligible improvement, with Card Factory PLC now at a current trading price of £1.90 (Spreadex, 24/09/2018).
The firm’s last update came in early August, and was responsible for sending it to that aforementioned record low. There Card Factory revealed that, while total sales for the 6 months to the end of July had risen 3.2% (almost half the 6.1% posted at the same point the year previous), like-for-like sales had fallen -0.2%. That’s a huge swing from the 3.1% increase seen in H1 FY18, with the company blaming the ‘weak consumer environment and extreme weather conditions’ for the drop.
All this meant, shock-horror, that Card Factory warned on profits, and now expects underlying FY19 EBITDA to come in between £89 million and £91 million, against the £94 million posted in FY18, ‘dependent on the key Q4 trading period’.
In terms of Tuesday’s update, investors will at the very least be hoping for signs that those underlying earnings will be arriving at the upper end of estimates, though given that the big quarter is still to come, Card Factory may not be comfortable with changing it guidance just yet.
Card Factory PLC (LON:CARDC) has a consensus rating of ‘Hold’ alongside an average target price of £2.11.
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