(Alliance News) - Card Factory PLC shares slumped on Thursday after the greetings cards retailer reported a "challenging" Christmas period and said it expects a full-year earnings fall as a result.
Shares were 22% lower at 109.49 pence each in London on Thursday morning.
Revenue in the 11 months to December 31 was up 3.6%, improving from 3.4% growth over the same period a year earlier, but like-for-like sales declined by 0.6%. Over the same period in 2019, like-for-like sales were down by 0.1%.
Card Factory said: "The Christmas trading period was challenging. The general election and weak consumer sentiment ensured that the long-running trend of declining high street footfall was maintained.
"Management was able to offset the footfall decline, in part, by once again increasing average transaction value. This was achieved by making more sophisticated use of data to improve ranging decisions, as well as continuing to improve the quality of products offered."
The company has had 47 net store openings in the UK and Ireland so far in the financial year ending January 31. The new stores "are performing well", it said. The total estate now stands at 1,019 stores, including 13 in Ireland.
Cardfactory.co.uk, its online unit, registered revenue growth of 15% year-on-year during the 11 months. Over the same period last year, revenue in the division soared by 59%.
After the tough Christmas trading period, the company said it expects adjusted underlying earnings before interest, tax, depreciation and amortisation, also excluding IFRS 16 adjustments, to be in the range of GBP81.0 million and GBP83.0 million in the current financial year.
This could represent of a decline of as much as 9.4% from GBP89.4 million last year.
Looking further ahead to financial 2021, Card Factory said its adjusted underlying Ebitda could take a hit of up to GBP10 million, amid more declines in high street footfall and a depressed pound.
The company explained: "To date there has been significant success in mitigating in large part the Ebitda impact of these external factors through a combination of offer improvements and business efficiencies. These efforts will continue, but the opportunity for efficiencies within the current business model is finite.
"Accordingly, the board anticipates that, on a business as usual basis, the net impact of market headwinds on financial 2021's adjusted underlying Ebitda is likely to be in the range of GBP5 million and GBP10 million."
Staying with the 2021 financial year, the company added that it does not expect to pay a special dividend during that period.
Card Factory didn't comment on the dividend for financial 2020 other than to say it remains committed to its current dividend policy. For the first half of the year, it kept both the ordinary and special dividends flat, at 2.9 pence and 5.0p respectively.
Card factory said it is on track for roughly 50 net new stores openings, highlighting its "solid pipeline" of new opportunities.
This month, the company will roll out its greeting card range at The Reject Shop Ltd, an Australian discount shop chain with 360 stores in the country.
The company will unveil the findings of its strategic review, when it reports its full-year results on April 21.
Card Factory added: "The review is not yet complete, but the board is confident that it will yield a number of attractive medium term growth opportunities across both new and existing channels, albeit there may be a requirement for additional strategic investment in financial 2021 to support this future growth."
By Eric Cunha; ericcunha@alliancenews.com
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Card Factory (CARD)