As the UK’s leading greeting card retailer, there was much anticipation surrounding Card Factory’s trading statement (issued yesterday, January 10) about its Christmas trading. Despite the value retailer delivering credible results, showing sales to be largely flat (down 0.1%) the City was not satisfied and the share price dropped 10%.
Card Factory’s Christmas performance was in line with fellow card specialist Scribbler while bookchain Waterstones had a more positive story to tell on its card and calendar sales this Christmas.
PG Buzz shares the spills…
Karen Hubbard, ceo of Card Factory:
Overall verdict: “Robust”
How did you fare?: “Across the estate, Christmas trading remained robust, with like-for-like sales down -0.5% for the YTD. Sales from cardfactory.co.uk continued to grow strongly, up 59.1% YTD. The combination of store and online sales, delivered overall Card Factory YTD LFL sales down -0.1%.
The Group delivered creditable revenue growth in the festive period, driven primarily by our new store rollout, with LFL trading reflecting the continuing weakness in consumer demand experienced across the retail sector in the run-up to Christmas.”
Mitigating circumstances: “The Christmas trading period was challenging due to lower high street footfall.
Hunch for the future: “Assuming a steady state, we anticipate that the foreign exchange headwind should dissipate in FY20. We continue to mitigate a large proportion of expected cost challenges, including National Living Wage and electricity wholesale prices, which will result in £5-6m of additional costs.
In light of the current consumer and macro-economic backdrop, we anticipate that FY20 will be another difficult year.”
John and Jennie Procter, co-owners of Scribbler:
Overall verdict: “A lot better than we thought it would be.”
How did you fare?: “Our Christmas card sales ended up on a par with the previous year. We were delighted with that, especially given the disappointing run up in November. We were bracing ourselves for a double-digit decline, driven primarily by packs, so are very happy with the final result. Our Christmas Eve sales were extraordinary – up 30% on the previous year. A shining light, bizarrely, was our everyday card performance, which remained strong throughout.”
Changing buying habits: “We are beginning to sense some increased negativity with regard to the consumerism of Christmas in the press and many people are really questioning the point of sending multiple cards to those they rarely see.
Add to this are the concerns over the cost of postage and sustainability. And then there are those emails: ‘We have decided not to send cards this year and will be making a charitable contribution instead.’
Whether that charitable contribution is ever made is a mute point!”
Mitigating circumstances: “The shift online that drove footfall down was, without question, a major factor; unilateral discounting by beleaguered retailers and, of course, the unbelievable chaos and uncertainties surrounding Brexit with many people genuinely worried about their employment prospects in the New Year.”
Star performers: “As ever ‘the cards your mother wouldn’t like’ – enough said!”
Your approach for Christmas 2019: “We will not, place too much reliance on Christmas to drive profitability in 2019. We will buy and print fewer Christmas cards; we will launch later and maintain a much more comprehensive everyday offer.
However, the future is bright as we are confident that Valentine’s Day, other Spring Seasons and occasions cards will continue to grow as customers will always want special cards for special people.”
Claire Quinn, buyer of cards, wrap and calendars for Waterstones:
Overall verdict: “Nice surprise.”
How did you fare?: “Our Christmas trade across all non-book products ended almost 2% up on the previous year which was a nice surprise given the slow start to the season. Single card sales gained significant momentum in the lead up to Christmas, with a staggering 61% of total sales coming from the final three weeks. Sales of singles were slightly down on last year but Christmas boxes had a fantastic year, ending 13% up on the previous year.”
Changing buying habits? “More of our customers chose to buy Christmas boxed cards this year over singles, which is a complete turnaround on last year’s trend. Christmas card sales for December were up 5% YoY suggesting that our customers were generally leaving it later to buy their cards, particularly single cards.”
Mitigating circumstances: “Given the uncertain economic climate, customers may have been looking to get more for their money this year, opting for a box of cards rather than buying multiple single cards, although this is not necessarily a bad thing.”
Star performers: “A number of Museums and Galleries’ boxes were consistently in our top 10 across the category and Raspberry Blossom’s fun and vibrant designs proved a popular choice within our single card range, offering something a bit different. We issued stronger merchandising guidelines to the shops this year for their Christmas boxed card displays which I think helped the ranges look far more cohesive and attractive to the customer and ultimately boosted sales.”
Approach for Christmas 2019: “We may look to expand our Christmas boxed cards range slightly following the latest consumer buying patterns we’ve seen.”