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Card Factory revenues rise

Thursday, 11th August 2016
Card Factory's first half revenue increased by 4.8% (H1 FY16: +8.0%). First quarter sales growth was softer than levels recently achieved with variability in retail footfall impacting weekly sales patterns.

It said this trend continued in the second quarter, both in the lead up to and following the EU referendum, the wider impact of which remains uncertain.

Like-for-like sales growth for Card Factory increased by +0.2% (H1 FY16: +2.8%) with ongoing strong growth from the new website. As expected, the website's rate of growth slowed in April as we reached the anniversary of its relaunch.

Excluding the website, like-for-like sales performance for our store network was broadly flat at -0.1% (H1 FY16: +2.7%) with consistently strong growth in average spend being offset by lower transaction numbers, as reported for Q1.

Card Factory opened 34 net new stores in the period (H1 FY16: 36) bringing the total estate to 848 stores as at 31 July 2016. The contribution of net new store openings to overall Group revenue growth was slightly lower than the first half last year, partly as a result of openings being on average slightly later than in the equivalent period last year.

Card Factory says it remains on track to deliver approximately 50 net new stores in the current financial year with all expected to be open in advance of the important Christmas season.

Year-on-year sales performance at was flat with improvements in average spend being offset by lower visitor numbers. Whilst faced very strong prior year comparatives in the first half (H1 FY16: +24.9%), the second quarter was particularly disappointing. We continue to target like-for-like sales growth of at least 10% at and we are currently investing in a number of business improvement initiatives in pursuit of this aim.

Chief executive Karen Hubbard said: "As highlighted in our Q1 announcement, the retail environment in the first half has been challenging and, as widely reported, footfall patterns in the first half have generally been soft. Card Factory is not immune to these wider factors and our sales growth over the period was lower than our normal levels as a result.

"It is too early to assess the precise impact on overall consumer sentiment and retail footfall from the result of the EU referendum. However, we enter the second half with confidence in the quality and value of our offer, including our new Christmas range, and we will target improved sales growth in the second half.

"Despite the near term challenges, Card Factory remains the clear market leader in the robust and resilient greetings card market with a strong value proposition, a unique vertically integrated operating model, significant scale advantages, superior margin structure and a strong management team.

"We remain as convinced as ever of the strong growth prospects for the business, and of our ability to deliver strong shareholder returns over the medium term. We are confident of delivering full year underlying profit before tax within the range of analysts' current expectations."

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