Will investors find anything to celebrate in Card Factory’s Q3 statement on Wednesday?
It has been a truly terrible year for the high street retailer. The stock almost immediately collapsed as 2018 got underway, an ugly post-Christmas update taking it from an opening price of £2.93 to the wrong side of £2 by the end of January.
A brief rally in April aside, it has struggled to pick itself up off the floor since then, repeating striking sub-£1.80 all-time lows. Card Factory PLC now sits at a current trading price of £1.88.
The company’s most recent statement was September’s interim results. While revenue was up 3.2% to £185.3 million, Card Factory’s like-for-likes actually fell 0.2%, a huge swing from the 3.1% increase it had seen during the same point the previous year. Even worse, when cardfactory.co.uk is stripped out, comparable sales were down 0.7%, the company blaming ‘lower high street footfall in a weak consumer environment’.
Elsewhere, a 17.2% increase in pre-tax profit to £27.2 million was countered by news that its half year dividend would be 5p per share, at the bottom end of its 5p to 10p guidance. One small mercy was that the company kept its full year outlook unchanged, something that wasn’t necessarily a guarantee given its 2 previous profit warnings in 2018.
What’s interesting is that, at a time of location-cutting measures by some of its high street peers, Card Factory is pushing ahead with its expansion. During the half year it opened 25 net new stores, with hopes of approximately 50 net new UK openings by the year end.
With the company now heading into the key Christmas period, investors will want to see those FY forecasts stay unchanged in Wednesday’s Q3 update. The firm is looking for underlying EBITDA somewhere between £89 million and £91 million.
Card Factory PLC (LON:CARDC) has a consensus rating of ‘Hold’ alongside an average target price of £2.11.
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