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Card Factory Reveals A £16.4 Million Pre-tax Loss Due To The Pandemic

Card Factory yesterday (June 10) revealed that the pandemic has cost the value retailer dearly, reporting a £16.4 million pre-tax loss in the year up to end of January, compared to a £67 million profit for the previous year. Its turnover, £285 million for the 12 months to end of January, took a 37% tumble compared to the previous year. In line with other non-essential retailers, Card Factory’s shops were closed for five months in the 12-month period to end of January. While it has benefitted from revamping its online presence as well as increasing its prices on a number of its greeting cards, these measures alone were never going to be enough to overcome such lengthy store closures, especially as they coincided with the key events of Mother’s Day and Christmas.

Above: In the period immediately following the retail reopening in England and Wales, Card Factory was trading ahead of expectations.
Above: In the period immediately following the retail reopening in England and Wales, Card Factory was trading ahead of expectations.

In his chairman’s statement, Paul Moody said that “Card Factory has demonstrated strong resilience in the face of the wide-ranging impact of the pandemic.”

Paul shared how Card Factory’s trading “recovered steadily following reopening after the first and second lockdowns, with transaction volumes outperforming UK retail footfall data” saying he was “particularly pleased with how our stores performed in October as we swiftly reacted to meet the increased customer demand to buy Christmas ranges early.” However, like other card retailers, the November lockdown saw Christmas sales going to “essential shops that were able to trade, as well as online.”

Above: Paul Moody delivering Card Factory’s five year strategy to analysts last July.
Above: Paul Moody delivering Card Factory’s five year strategy to analysts last July.

Having joined Card Factory in March, in his first preliminary results report, Darcy Willson-Rymer, ceo, made comment about changing consumer shopping habits, “with customers choosing to shop more evenly during the week, visiting less frequently but spending more”. However, while accepting the importance of creating a compelling online presence, which he describes as “an area of focus and opportunity for Card Factory” Darcy stressed how the majority of card sales will continue to come from bricks and mortar retailers.

“Perhaps unlike other parts of the retail market – we are of the view that the majority of money spent on cards will still be in stores and on the High Street during the years ahead,” said Darcy.

Above: Card Factory has started highlighting the artists and designers behind its ranges on social media.
Above: Card Factory has started highlighting the artists and designers behind its ranges on social media.

The last year has seen the retailer invest in its online activities, including the relaunch of  cardfactory.co.uk on a new platform as well as a new Card Factory app on iOS and Android.

“Customers are embracing these apps, which accounted for 9% of online transactions by late May 2021, with the app generating 45% more repeat orders than our website,” revealed Paul Moody.

Above: Card Factory’s app has worked well for repeat orders.
Above: Card Factory’s app has worked well for repeat orders.

Card Factory’s online sales generated £27.6 million of its turnover (up from £19.4 million the year previous). Its sales through retail partnerships (such as with Aldi) accounted for £5.6 million, up from £3.1 million the previous year.

In the year covered in the results, over half of Card Factory’s sales came from single cards (51.1%) and 2.2% from boxed cards, with the remaining 46.7% of sales from non-card products, with partyware singled out as performing well for the retailer.

Above: Partyware is doing well for Card Factory.
Above: Partyware is doing well for Card Factory.

The preliminary results come a few weeks after Card Factory announced that it has clinched a £225 million refinancing package with its existing banking syndicate. (https://www.pgbuzz.net/card-factory-clinches-225-million-refinancing-package/)

Top: Card Factory’s sales dropped by over a third over the year to 31 Jan 2021 due to the pandemic.

 

 

 

 

 

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