RE: Bargain @ these prices28 Mar 2024 18:20
Nice to see some chat on here for once. I just cannot get my head around the lack of interest here...but to be honest, thats what makes it so exciting.
I've had many instances of things getting to extreme valuation levels over the past year and snapping back hard rapidly and near bagging. However, in terms of raw quality of business, and lack of complexity to the story, Card Factory takes the crown by a mile. At 6x earnings (potentially under 5x for january-26 YE), you get the highest margin / return on tangible equity (CF's is negative i.e. they have to put up no equity of their own to run the business and are completely financed by their payables / landlords) in the UK retail landscape. Additionally, you get one which is value focused and performingly strongly currently, with lots of growth upside in the form of gifting / baloons / international expansion. Customers are sticky, and competition is completely withdrawn e.g. Clintons + expensive crap selection of cards at supermarkets.
I find the online/moonpig debate quite funny...people who shop at card factory are never going to be spending 4-8x as much at moonpig. the obsession of the city and other people on here with online highlights why this is being so massively missed. as an earlier poster has said...you can't argue with the numbers. and the resilience of card buying has been clear for a long time.
I think you have a few big things going on here - 1) there is still a large seller, fine but that will at some point clear and so while this has been frustrating in terms of opportunity cost I don't want to miss the inevitable clearing of him which will alone send this much higher, 2) people in the city are rich males predominantly who really really do not get the clientele of card factory - more so than the different socio-demograhic, the fact +80% of card purchases are by females adds to the lack of 'getting it' and its hard for them to understand that for many people xmas might be a budget of 80 quid for 6 loved ones and card factory allows them to fill an entire basket of cards and goodies, 3) the card factory shopping experience is not appreciated unless you really travel around and spend time in the stores speaking with staff...they provide a truly excellent experience for everyone which other value retailers simply don't do - they are generally messy and grim to be in...every CF I've been into is immaculate, clean, nice lighting and staff that make you feel good; as was pointed out to me recently which I hadn't picked up on, every person who goes into card factory is buying something for a loved one...I can't think of any other retailer where every time you buy something its for someone else and part of a little emotional journey.
if I have one criticism...they have been far too slow to do something in terms of capital allocation ie a buyback with this seller around. they could create a lot of value!!
Sign In
Follow the stocks
