Card Factory sent lower despite strong first-half sales

(ShareCast News) - A first-half trading update from Card Factory revealed the retailer enjoyed better than expected like-for-like sales growth of 2.7% as it confirmed a return of surplus cash will be made later in the year.Total sales grew 8.0% during the six months to 31 July, up from the 7.5% in the first quarter as the store roll-out continued with the opening of 36 net new stores, including the FTSE 250 group's 800th store, on top of an LFL sales performance at the upper end of management's targets and a good online performance.Analysts at UBS said the LFL figure was higher than its 2% estimate, implying a slightly lower contribution from new space.While the gettingpersonal.co.uk website delivered "strong revenue growth", it will face tougher comparative figures in the second half of the year but, the company said, "its current direction of travel continues to be very pleasing", with the relaunched CardFactory.co.uk website in the first quarter expected to also grow online revenues over the medium term what is currently a small base.However, ahead of the cash return that will be made at the time of the interim results, net debts increased to £109m from £91.9m reported at the end of the first quarter as strong ongoing cash generation was offset by June's £23.2m payment of dividends for the last financial year, on top of the start of the normal working capital outflow as stock is built up for Christmas.In anticipation of the cash return, management has amended and extended its existing £200m revolving debt facility, reducing the margin payable by between 0.25% and 0.75%, depending on the group's leverage.Over the full year, management remain confident of delivering roughly 50 net new openings and reiterated that their expectations for the full financial year were unchanged."We remain confident of our ability to continue to increase market share whilst delivering on all four pillars of our growth strategy," said chief executive Richard Hayes.UBS highlighted the new revolving credit facility (RCF), which it noted on current leverage may save £0.5 to £1m or circa 1% on profit before tax on an annualised basis."We would expect share to react positively with sales in-line and the refinancing potentially giving scope for a larger capital return than expected and the lower finance costs helps underpin full year PBT forecasts."