Card Factory posts fall in profit after facing cost headwinds
Greeting cards retailer Card Factory has seen its full year pre-tax profit decline by 12.3% to £72.6 million after facing “tough” trading conditions and cost headwinds.
In the year to 31 January, underlying pre-tax profit dropped by 5.5% to £80.5 million although revenue was up 6% to £422.1 million. On a like-for-like basis, sales were up 2.9%,
Karen Hubbard, Card Factory chief executive, said: "We delivered strong like-for-like sales growth in a tough trading environment. We sold more cards than the prior year, and delivered a higher average card selling price and total basket size.
"From a profit perspective, we faced strong headwinds of £14.6 million in the year, principally due to the combined impact of foreign exchange and national living wage.”
Card Factory said it is looking to benefit from a range of cost saving initiatives which have already helped the business but warned that EBITDA growth in the current financial year is likely to be limited given the continuing cost headwinds.
During the year, Card Factory opened 50 net new stores in high streets, shopping centres and retail parks, to bring the total UK estate to 915. It also launched six trial stores in the Republic of Ireland.
The company said it is satisfied with how it has started the new financial year and with its record performances across Valentine's Day, Mother's Day and Easter.
Card Factory will be focusing on improving store productivity and supply chain efficiency in the current year as it works to mitigate external pressures and maintain margins.
Hubbard added: "Our unique, vertically integrated business model remains strong and we have now established a solid platform for future growth, with our four-pillar strategy continuing to support strong cash generation and a progressive dividend policy.”
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