10th Jan 2019 08:27
LONDON (Alliance News) - Card Factory PLC said Thursday said that while its revenue growth in the recent festive period was "creditable", its flat like-for-like trading reflects a continued weakness in consumer demand across the retail sector.
Card Factory shares were down 9.9% at 175.44 pence on Thursday morning.
The greeting card and gift retailer's revenue growth for the 11 months ended December 31 was 3.4%, compared to 5.9% growth a year before.
Like-for-like sales in the 11 month period, however, declined a very slight 0.1%, compared to a 3.0% increase in the same period a year ago.
The cardfactory.co.uk business was the strongest performer, with revenue up 59%, although this was a less significant increase compared to its 66% growth a year before.
Card Factory's other business, Getting Personal, did not fare as well with revenue declining 7.8% after increasing by 1.0% the year before. The division sells personalised gifts.
Card Factory's expectation for group underlying earnings before interest, taxation, depreciation, and amortization in its full year, which ends January 31, remains unchanged at between GBP89 million and GBP91 million.
"The group delivered creditable revenue growth in the festive period driven primarily by our new store rollout, with [like-for-like] trading reflecting the continuing weakness in consumer demand experienced across the retail sector in the run-up to Christmas," Card Factory said.
Card Factory opened net of 51 new UK stores and another 1 in the Republic of Ireland over the 11 months, bringing its total estate to 973 stores at the end of December.
Card Factory expects its foreign exchange headwind to "dissipate" in its financial year ended January 2020.
The firm also said it is continuing to mitigate cost challenges such as the new UK national living wage and higher wholesale electricity prices, which will result in between GBP5 million and GBP6 million of additional costs.
"In light of the current consumer and macro-economic backdrop, we anticipate that [financial 2020] will be another difficult year," Card Factory said, with earnings before interest, taxation, depreciation, and amortization to remain broadly flat with "limited sales growth".
Card Factor Chief Executive Karen Hubbard said: "The Christmas trading period was challenging due to lower high street footfall. However, Card Factory performed robustly in this competitive trading period. As a result, like-for-like store sales have remained consistent."
"Whilst we expect ongoing challenges from the consumer and macro backdrop, we continue to lead the market with our proposition, underpinned by our ongoing investment in our unique vertically integrated model which provides our business with significant competitive advantages," Hubbard added.
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