Card Factory sees sales halve in wake of Covid-19 pandemic

(Sharecast News) - Card Factory expects sales to have nearly halved in the wake of the Covid-19 pandemic, although sales since reopening began had performed ahead of expectations.

The company forecast that aggregate revenues for the fist half of its 2021 financial year ending on 31 July would come in at approximately £100.0m, against £195.6m seen during the previous year.

Yet in a trading update ahead of its Capital Markets Day presentation, the company also said that as of 24 July 1,015 of its 1,018 stores had reopened.

Like-for-like sales at its stores since reopening began on 15 June were down 21.6%, but that was a far better outcome than the halving in revenues it had anticipated in the first month of reopening.

Similarly, while in-store transactions had dropped, average spend had jumped 24.9%.

Online sales at both cardfactory.co.uk and gettingpersonal.co.uk continued to exceed previous year's sales too.

Digital like-for-like sales were up 68.9% for the present financial year to 19 July, were 120.7% higher during the 2-week period of store closures, which ran from 23 March to 14 June, and until 19 July were up 60.5%.

Linked to the above, the new cardfactory.co.uk website was launched on 2 July.

The company's management also highlighted that important seasons, including Father's Day and Easter had been "materially affected", while since reopening, there was "understandable reduced demand" for 'Thank You Teacher', Wedding and Children's Party ranges.

At £144.2m, its net debt position was better than anticipated by management, which expected the firm to remain within its revised banking covenants, having carefully managed its costs, cash and creditors.

Among the latter were about £24.7m in cost deferrals for rents, VAT and some agreed payments to suppliers.

Card Factory had also obtained £15.5m of funding under the Coronavirus job retention scheme and, if required, was eligible to issue commercial paper under the Covid Corporate Financing Facility, should it be required.

The company was nonetheless guarded on the outlook, telling shareholders that: "it is far too soon to determine whether initial trading reflects the release of pent-up demand following lockdown or the point at which consumer footfall and sales (both transactions and average spend) will settle to a sustainable level."

Management was scheduled to host a Capital Markets Day at 1400 BST on 28 July where, among other matters, it would discuss its financial goals for the 2025 financial year, including for annual sales of roughly £635.0m and underlying profits before tax of about £105.0m after accounting for its leases under IFRS 16.

Yet top on the list of concerns was likely to be the process of naming a new chief executive officer following the resignation of its previous boss, Karen Hubbard, justtwo days before.

As of 1207 BST, shares of Card Factory were 5.74% higher to 44.20p.