Card Factory full-year profits fall as it prepares for phased reopening

The card specialist posted a 4.4% fall in pre-tax profit to £65.2m in the year to January 31, down 11.8% on an underlying basis to £67.2m. Revenue during the period rose 3.6% to £451.5m, but was down 0.5% on like-for-like terms.

The retailer, which opened a net 50 new stores during the year is planning on reopening 10% of its stores on June 15 in order to test trading under “Covid-secure” conditions. The retailer has said that it will reopen further stores following that date “subject to early learnings”.

The initial store reopenings will take place predominantly in the north-east and north west, in retail parks and local high streets that were experiencing good footfall pre-lockdown. Card Factory plans to eventually reopen all stores to the public; and the speed at which stores reopen will be dependent on customer response.

Safety precautions include sneeze screens, a customer host at the door, hand sanitiser and a one-way system around store.

Card Factory’s store estate is currently closed under government guidance as a ‘non-essential’ retailer and 90% of its staff are furloughed, but online sales have soared during the period. The card specialist’s ecommerce sales have more than trebled sine lockdown began and are up 153% year to date.

The retailer said it recorded record sales across Valentine’s Day and Mother’s Day, but sales across the Christmas period were more subdued.

Card Factory has also scrapped financial guidance for the current financial year amid Covid-19-induced market uncertainty.

Chief executive Karen Hubbard said: “We delivered a reasonable sales performance in a challenging year for the high street, growing both our volume and value card market share in the mature and stable UK greeting card market. Our profitability was, however, impacted by a number of recurring cost pressures and other one-off operational costs which we were not able to fully mitigate.

“Since the year end, whilst we have continued to evolve our medium- and longer-term plans, a key focus has been on appropriately managing our business and protecting our staff through the Covid-19 crisis.

“Our board and management team have reacted rapidly to the very dynamic situation and I am confident that we will exit this crisis with an operating model and customer proposition that will make Card Factory the customers’ first choice for greeting cards, everywhere and for all occasions, however the customer wishes to shop.”

With pureplay greetings cards retailers such as Moonpig and Funkypigeon more than doubling their sales during lockdown, Hubbard also says that Card Factory is poised to meet customers “where and how they want”.

“We were already on a journey to become a multichannel retailer, where customers can start their journey at home and finish in store or vice versa, and we will be ready to launch our new website platform [to help with this] in the first half.

“How the market will look after Covid is over, we will have to watch and learn, but we’ve increased our fulfilment capacity with a new centre in Wakefield and we are all set for good online sales.

“Ultimately the majority of cards are still traditionally bought in stores, but we are perfectly poised to take more of that [online] market.”