22nd Jan 2015 11:44
LONDON (Alliance News) - Card Factory PLC on Thursday said it is trading in line with its expectations for the year on the back of a rise in revenue in the first eleven months, but shares in the company fell as its like-for-like sales growth slowed against strong comparables.
Card Factory said for the 11 months to the end of December, revenue rose 8.1%. Like-for-like sales rose 1.8%, slower than the 3.1% growth reported for the same period last year due to strong comparable figures.
Shares in the company were down 4% to 264.72 pence on Thursday, one of the worst performers in the FTSE 250.
The cards and gifts retailer said the like-for-like performance was driven in part by its localised pricing strategies, particularly in the final quarter.
The group has opened 51 new stores in the year to date, bringing its total estate to 764 stores. It said its store pipeline is robust for its next financial year, starting February 1, and said it expects to maintain its target of opening at least 50 new stores per year.
The group said is is highly cash generative and said it expects its net debt to significant reduce for the year to January 31, with net debt to be at the low end of market guidance.
It also said it is delivering strong margins through using its vertically-integrated business model. It is focusing now on the roll-out of its new electronic point of sale systems, which it has now installed in more than 50% of its stores. It expects a number of efficiencies to be achieved through the installation of the systems over the medium term.
Card Factory said it will post its full-year results on March 25.
"With only a few days of our financial year remaining, it is pleasing to report that the group continues to perform well, has had a solid Christmas trading period, and is on course to deliver sales growth at a similar level to the previous year," said Card Factory Chief Executive Officer Richard Hayes.
Investec reiterated its Buy rating and 310 pence price target on the stock, saying it delivered another good sales performance and is trading in line with market expectations.
The broker said total sales growth was in line with its estimates and said the slowdown in like-for-like sales growth was against strong comparables and was driven by Christmas card sales being weighted toward lower-margin boxed cards, a declining market which does not provide material contribution to Card Factory's profit.
By Sam Unsted; [email protected]; @SamUAtAlliance
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