Card Factory sales fall 0.5% over Xmas; says 2020 will be 'difficult'

Greeting card retailer Card Factory said like-for-like sales over Christmas fell 0.5%, reflecting continuing weakness in consumer demand, as it warned 2020 would be “another difficult year”.

The company said expectations for underlying earnings before interest, tax, depreciation and amortisation (EBITDA) for the current full year remained unchanged at £89m - £91m.

It added that its anticipated foreign exchange headwinds should dissipate in full year 2020, adding that it expected EBITDA to be broadly flat, based on limited sales growth.

“We continue to mitigate a large proportion of expected cost challenges, including National Living Wage and electricity wholesale prices, which will result in £5m-6m of additional costs,” the company said.

Online sales continued to grow strongly, up 59.1% in the 11 months to December 31, offsetting weaker footfall on the high street to bring in flat year-to-date like-for-like sales.

The company said it opened 51 net new UK stores plus one new store in Republic of Ireland, bringing the total estate to 973 stores at December 31, including seven trial stores in Republic of Ireland.

The Getting Personal division continued to face a market environment “defined by heavy discounting and increasing cost of customer acquisition”, Card Factory said.

“The business is focused on delivering profitable sales via lower cost acquisition channels and continues to be a profitable contributor to the group.”

Chief executive Karen Hubbard said despite the lower high street footfall Card Factory “performed robustly in this competitive trading period”.

“As a result, like-for-like store sales have remained consistent and in line with our quarter three update in November,” she said.

"Although the group has faced significant cost pressures in the year, these have reduced and we have been able to take mitigating action to maintain robust gross margins.”

"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."