Card Factory profits hit by wage and currency costs

Pre-tax profits dived 14.1% to £23.2m despite revenues rising 6.1% to £179.6m and like-for-likes increasing 3.1% in the six months to July 31. Online sales grew 30%.

Card Factory blamed the impact on profits on wage and currency costs as well as its own programme of investment.

Boss Karen Hubbard emphasised that Card Factory’s business model “remain[ed] highly cash generative” but added: “We have not been immune to the cost headwinds of foreign exchange and national living wage.

“We have been able to partially mitigate these challenges through business efficiencies, although the margin impact has been higher than initially expected, largely due to our decision not to raise prices so as to maintain our leading value proposition with our customers.”

Card Factory’s investment programme is focused on its new store roll-out and the development of online channels.

It added 30 stores during the six months, bringing its UK total to 895, and opened a trial store in the Republic of Ireland, with another three added since the end of July.

It invested in a new management team for personalised greetings website gettingpersonal.co.uk, where sales grew 5%.

Card Factory is also focused on gaining business efficiencies in a bid to protect its high margins, which sat at 20.2% during the six months, as current growth is coming from lower-margin non-card sales in addition to pressures from the rise in wage costs and currency headwinds.