Against the backdrop of Clinton Cards talking about going into administration it was a very pleasant surprise for investors in Card Factory (LON:CARD) to see the positivity in today’s Trading Update.
Its shares have opened 16.5% higher at 103.5p.
The £304m capitalised group, which is the UK’s leading specialist retailer of greetings cards, gifts and celebration essentials, reported that trading in the first half to end July was materially ahead of Board expectations.
That is even more impressive when the group states that the macro-economic environment continues to be uncertain, despite which it is expecting that the second half year to end January 2024 will show its strong performance continuing to result in far better than the market’s estimates.
Competitor Clinton Cards has been recently reported to be looking to close around a fifth of its stores in order to stave off insolvency.
Trade publisher Retail Gazette has mentioned that part of Clintons plans could see it close 38 stores., on top of the 156 shops it closed back in December 2019 as part of a pre-pack administration, when its previous owner, the Weiss family that owns US giant American Greetings, snapped it back up.
The Wakefield-based Card Factory, which now turns over nearly £10m each week, started its operations way back in 1997 with just one shop, has expanded mainly through its organic growth into now having a nationwide presence.
The group now has over 8,800 employees and has around 1,020 stores in the UK and Ireland.
The UK market for greetings cards is some £1.4bn a year.
Estimates exist for the group to make around £51.5m pre-tax in the current year on the back of some £500m sales, worth 11p in earnings per share.
Next year estimates suggest £532m revenues and £56.1m profits and 12p earnings.
The company’s shares bottomed out in late August last year, down to 40.40p, and peaked at 114.80p in early May this year.
The average consensus view from the four analysts that follow the group is that the shares will go at 126p in due course.
This morning they have opened at 103.5p, up 16.5%.